Semiconductor major Intel Corporation (NASDAQ: INTC) recently reported weaker-than-expected results for the second quarter ended July 2, 2022. Both revenue and earnings failed to surpass the Street expectations. Following the downbeat results, shares of the company declined almost 8% to close at $36.41 in yesterday’s extended trade.
Revenue, Earnings Dwindle
Intel reported quarterly revenues of $15.3 billion, down 17% from the year-ago quarter. Further, the figure failed to top the consensus estimate of $17.9 billion. A year-over-year drop of 25% and 16% in key revenue segments, namely, Client Computing Group and Datacenter as well as AI Group, acted as a drag on the overall revenues of the company.
The company’s earnings per share (EPS) for the quarter came in at $0.29, which indicates a decline of 79% from the prior year. Moreover, the figure missed the consensus estimate of an EPS of $0.69.
A Look at Some of the Key Operating Metrics
Intel reported an operating loss of $700 million for the quarter compared to an operating income of $5.5 billion reported in the previous year.
Also, the gross margin declined from 59.8% in the year-ago quarter to 44.8%.
The company’s net cash from operating activities for the quarter decreased to $6.7 billion from $14.1 billion in the previous year.
However, the company’s dividend yield of 3.66% is much above the sector average of 0.94%.
Future Outlook
Intel provided revenue and EPS guidance for the third quarter and 2022.
In the third quarter, the company expects to witness revenues of $15-$16 billion and EPS of $0.35 per share. The consensus estimate for revenue and EPS is $18.62 billion and $0.87, respectively.
Similarly, for 2022, the company’s revenue expectations are between $65-$68 billion. Meanwhile, EPS is expected to be $2.30 for the same period.
Management’s Commentary
CEO of Intel, Pat Gelsinger said, “This quarter’s results were below the standards we have set for the company and our shareholders. We must and will do better. The sudden and rapid decline in economic activity was the largest driver, but the shortfall also reflects our own execution issues. We are being responsive to changing business conditions, working closely with our customers while remaining laser-focused on our strategy and long-term opportunities.”
Wall Street’s Take
Consensus among analysts is a Hold based on five Buys, 11 Holds, and one Sell. The INTC average price target of $47.44 implies upside potential of 19.5% from current levels. Shares have declined 26.1% over the past year.
Investors Remain Upbeat About Intel Stock
TipRanks’ Stock Investors tool shows that top investors currently have a Very Positive stance on INTC. Further, 18.2% of the top portfolios tracked by TipRanks, increased their exposure to INTC stock over the past 30 days.
Key Takeaways
Intel’s results for the second quarter have been disappointing with both revenue and earnings declining from the year-ago quarter. Further, a muted outlook alludes to the fact that the company continues to reel from challenges in the economy.
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