Intel Corp INTC (INTC) closed up almost 7% Wednesday to $56.95 per share to the tune of just over 123 million trades. Though the company has been on a rise since the calendar rolled over into 2021, this resoundingly beats its 22-day price average of $49.92. Already, Intel is trading up 14.7% for the year.
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A Shakeup at the Highest Level
Shares of Intel Corp have been rising steadily in the past two weeks, starting out the year with much-needed gains after 2020’s turbulent year. But it was the company’s announcement this week that VMWare Inc’s VMW Chief Executive Pat Gelsinger, a 30-year Intel veteran with a robust engineering and technology background, would step into the CEO position to be vacated by Bob Swan on 15 February that propelled Wednesday’s sudden surge.
This marks a turning point for Intel as it moves from Swan’s fiscally minded approach to Gelsinger’s technology-based leadership. Intel’s news release confirms as much, stating that, “…now is the right time to make this leadership change to draw on Pat’s technology and engineering expertise during this critical period of transformation at Intel.”
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What Does This Mean for Intel?
This welcome change comes on the back of a tumultuous year for Intel. The company crashed hard at the onset of the pandemic, but swiftly recovered – and then crashed again to the tune of $13 a share in July. Just as it seemed the stock would overcome its second hurdle, it slid another $10 in October to its second-lowest point of the year. But now that Intel is once again charging toward its pre-pandemic targets, a corporate shakeup may do the company a world of good.
The world-renowned chipmaker has suffered a series of production missteps – spearheaded and indulged by poor leadership – that caused its fall from grace. More specifically, as production backed up and the company considering outsourcing, rival AMD swept in to claim the top spot of world-leading chipmaker and technology champion, which has seen Intel’s stock (and bottom line) take a hit.
While a CEO shakeup rarely leads to overnight progress, the stock market is already welcoming Intel’s new CEO with open arms. Intel further bolstered prices – and in the same breath soothed investors’ concerns – in its statement, noting that 7nm processor updates will be forthcoming in its 21 January earnings call. Additionally, the company noted, it expects its Q4 financial statement should exceed prior guidance of $17.4 billion in revenue and a $1.02 EPS.
Intel by the Numbers
Speaking of numbers: despite one of the most unprecedented years in corporate history, Intel came out strong at the end of 2020, boasting an 8.5% revenue gain to $71.97 million in the fiscal year. Its operating income saw an even greater increase of 10.76% in the last fiscal year – almost 35% over the last three – to $22.4 million, up from $18.4 million 36 months ago.
And the company seems to be right on track to overshoot its previous EPS guidance with an 8.5% increase to $4.71 in the last fiscal year. Currently, Intel is trading with a forward 12-month P/E of 13.04.
What Does Our AI Have to Say?
All of this data is well and good – but what does our AI think about the corporate shakeup?
At the moment, not much.
A corporate shakeup can be either great or traumatizing for a company suffering poor leadership, and the results of Intel’s won’t be seen for months or years to come. But the numbers don’t lie. Despite a year of decent year on the company’s balance sheet, our AI is still not sold on a tumultuous year of stock market performance, and has rated Intel with a D in Growth, C’s in Technicals and Low Momentum Volatility, and a B in Quality Value.
As a result, Intel Corp is rated Neutral for the month of January. Buy the surge at your own risk – or wait, and see what exciting (and profitable) changes may come on 15 February.
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