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Can This Tech Giant (That Returned 41% In 2014) Keep Running?

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Earnings season got underway Monday with industrial giant Alcoa Inc (NYSE: AA) posting strong results and SanDisk Corporation (NASDAQ: SNDK) pre-announcing a dismal quarter, which sent its shares tumbling 15 percent lower.

Although we are only two days into the fourth quarter earnings season, within the past week we've seen mixed results from the semiconductor industry showing conflicting stories ahead of Intel Corporation (NASDAQ: INTC)'s highly anticipated Thursday afternoon report.

Micron Technology reported earnings last Tuesday, beating bottom line estimates by 3 to 4 cents per share but coming up lite on revenues. Micron also set guidance for the second quarter shy of what analysts had hoped for. To make matters worse, on Monday, SanDisk shared its alarming preliminary 4th quarter results.

SanDisk pre-announced quarterly sales of $1.73 billion, well below the Wall Street consensus of $1.82 billion and the Estimize consensus of $1.83 billion.

While there are dark clouds over its peers, Intel has been nothing but hot. Last year shares of the stock appreciated 41 percent.

The rally started at the beginning of 2014 as a positive shock to enterprise PC demand, and helped Intel convert fading sales back into growth in the 4th quarter of 2013. Double digit increases in the Internet of Things and Data Centers have helped propel the company in recent quarters.image

Last quarter, Intel posted its best ever third quarter sales figure, driven by 8 percent year over year growth. On Thursday, Estimize contributors are forecasting that the rate of expansion will cool to a still favorable 7 percent.

Last year Intel's Internet of Things segment was its second best performing group by year over year sales coming in at +14 percent, although this only accounted for less than 4 percent of total quarterly revenue. The Data Center Group was the company's fastest growing component which recorded $3.7 billion in sales (25 percent of total) last quarter, up 16 percent year over year.

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Intel is doing a great job with its smaller divisions, but its PC Client group still remains by far its most important, and results have been impressive there. Last quarter, Intel reported PC Client Group revenue of $9.2 billion, making up 63 percent of total sales, and improving 9 percent from the comparable quarter of 2013.

Getting back to the big picture, all three of Intel's major segments had a strong showing last quarter and the tech giant is setting a favorable outlook for the current period.

With revenue growth firing on all cylinders and management guiding for 64 percent gross margins (up from 59.8 percent in FQ4 last year), it looks like we're on the verge of another positive quarter if the company can keep up with its own highly set goals.

The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

Posted-In: Long Ideas Technicals Opinion Trading Ideas

 

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