Intel Corporation (NASDAQ:INTC) Beats Q4 Sales Targets, Next Quarter Sales Guidance Is Optimistic

Jabin Bastian /
2022/01/26 4:32 pm EST
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Computer processor maker Intel (NASDAQ:INTC) reported results ahead of analyst expectation in the Q4 FY2021 quarter, with revenue up 2.75% year on year to $20.5 billion. On top of that, guidance for next quarter's revenue was surprisingly good, being $18.3 billion at the midpoint, 3.79% above what analysts were expecting. Intel Corporation made a GAAP profit of $4.62 billion, down on its profit of $5.85 billion, in the same quarter last year.

Is now the time to buy Intel Corporation? Access our full analysis of the earnings results here, it's free.

Intel Corporation (INTC) Q4 FY2021 Highlights:

  • Revenue: $20.5 billion vs analyst estimates of $18.3 billion (11.8% beat)
  • EPS (non-GAAP): $1.09 vs analyst estimates of $0.91 (19.7% beat)
  • Revenue guidance for Q1 2022 is $18.3 billion at the midpoint, above analyst estimates of $17.6 billion
  • Inventory Days Outstanding: 103, down from 106 previous quarter
  • Gross Margin (GAAP): 53.6%, down from 56.8% same quarter last year

Inventor of the x86 processor that powered decades of technological innovation in PCs, data centers, and numerous other markets, Intel (NASDAQ: INTC) is the leading manufacturer of computer processors and graphics chips.

Sales Growth

Intel Corporation's revenue growth over the last three years has been slow, averaging 4.1% annually. And as you can see below, last year has been even less strong, with quarterly revenue growing from $19.9 billion to $20.5 billion. Semiconductors are a cyclical industry and long-term investors should be prepared for periods of high growth, followed by periods of revenue contractions (which can sometimes offer opportune times to buy).

Intel Corporation Total Revenue

While Intel Corporation beat analysts' revenue estimates, this was a very slow quarter with just 2.75% revenue growth. We are still in the early days of the upcycle for Intel Corporation, as this was just the 2nd quarter of year on year growth.

Intel Corporation's revenue growth was positive this quarter, but the company is guiding to decline of 8.39% YoY next quarter, while analysts expect to see declines of 6.9% over the next twelve months.

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Product Demand & Outstanding Inventory

Days Inventory Outstanding (DIO) are an important metric for chipmakers, as it reflects the capital intensity of the business and the cyclical nature of semiconductor supply and demand. In a tight supply environment, inventories tend to be stable, allowing chipmakers to exert pricing power. Steadily increasing DIO can be a warning sign that demand is weak, and if inventories continue to rise the company may have to downsize production.

Intel Corporation Inventory Days Outstanding

This quarter, Intel Corporation’s inventory days came in at 103, 4 days above the five year average, suggesting that despite the recent decrease the inventory levels are still higher than what we used to see in the past.

Key Takeaways from Intel Corporation's Q4 Results

Sporting a market capitalization of $207 billion, more than $6.93 billion in cash and with positive free cash flow over the last twelve months, we're confident that Intel Corporation has the resources it needs to pursue a high growth business strategy.

We were impressed by how strongly Intel Corporation outperformed analysts’ earnings expectations this quarter. And we were also excited to see that it outperformed Wall St’s revenue expectations. On the other hand, it was less good to see the pretty significant deterioration in operating margin and the revenue growth was quite weak. Zooming out, we think this was still a decent, albeit mixed, quarter, showing the company is staying on target. But the market was likely expecting more and the company is down 1.7% on the results and currently trades at $50.82 per share.

Should you invest in Intel Corporation right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

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The author has no position in any of the stocks mentioned.