2022 Week 5: Intel Corp (NASDAQ: INTC)

Portfolio Update

The FiveTwenty portfolio received no dividends in the past week.

Past Week Dividend$0
Current Quarter Dividend (Q1 2022)$133.74
LifeTime Dividend$2,244.55
Estimated Annual Dividend$4,196.02
Dividend Scorecard

The capital allocation for the week of 01/30/2022 to 02/05/2022 will be used to add to our position in Intel Corp (NASDAQ: INTC).

INTC – Position Update

Since our last check-in on INTC in week 2 of 2022, the company reported Q4 and full year 2021 earnings on 01/26/2022. Additionally, the share price decreased 13.3% from $53.44 to $47.73 during the period.

TTMPrev. Update10-year median
Dividend Streak8 years7 years
Yield2.91%2.6%2.83%
Payout Ratio25.41%123.56%2
P/E8.7319.062
Entry Criteria Scorecard

1 computed using TTM adjusted EPS of $5.47 as of Q4 2021
2 computed using TTM adjusted EPS of $5.90 as of Q3 2021

Q4 2021 earnings report

Did INTC’s latest earnings report raise any warning flags?

In Q4 2021, INTC posted revenues and EPS results that exceeded the guidance provided during its previous quarter earnings report as well as analyst expectations. Furthermore, full-year revenues set an all-time record of $79 billion, up 1% YoY. The company saw strong growth in the DCG, IOTG, Mobileye, and PSG business segments in the quarter. The CCG and NSG segments came in lower than in the previous year. For the full year CCG (up 1%) and DCG (down 1%) came in more or less flat, while IOTG (up 33%) and Mobileye (up 43%) saw considerable growth.

Overall, in Q4 2021 revenues grew 3%, adjusted net income dropped 27%, and adjusted EPS were 26% lower compared to Q4 2020. For the full year revenues grew 1%, adjusted net income increased 4%, and adjusted EPS were 7% higher.

Revenue
(in billions)
Adj. Net Income
(in billions)
Adj. EPS
.
Q4 2020$20$6.1$1.48
Q4 2021$20.5$4.5$1.09
% Change3%(27)%(26)%

Additional noteworthy developments during the quarter:

  • As part of the Q4 earnings release, the company declared a quarterly dividend of $0.365 per share payable on 03/01/2022 to shareholders of record as of 02/07/2022. The new dividend amount represents an increase of 5%.

Looking ahead, INTC provided Q1 2022 guidance during its latest earning report. Expectations are as follows: revenues of $18.3 billion, adjusted gross margin of 52%, and adjusted EPS of $0.80.

Thesis

Why are we adding to our position in INTC?

INTC had a solid Q4 2021. Additionally, the company increased its quarterly dividend as expected for Q1 2022. Furthermore, the price drop during the last two weeks provides us the opportunity to add to our position at a reasonable valuation before the upcoming ex-dividend date.

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