Wall Street expects a year-over-year decline in earnings on lower revenues when Intel (INTC) reports results for the quarter ended December 2021. While this widely-known consensus outlook is important in gauging the company’s earnings picture, a powerful factor that could impact its near-term stock price is how the actual results compare to these estimates.
The earnings report, which is expected to be released on January 26, 2022, might help the stock move higher if these key numbers are better than expectations. On the other hand, if they miss, the stock may move lower.
While management’s discussion of business conditions on the earnings call will mostly determine the sustainability of the immediate price change and future earnings expectations, it’s worth having a handicapping insight into the odds of a positive EPS surprise.
For the current fiscal year, analysts expect a profit per share of $5.29, whereas in the previous year $5.30 had been reported. On the revenue side, analysts estimate that the company will bring in $73.52 billion in the current fiscal year.
The share prices for Intel Corporation (INTC) have recently fallen below their 20-day moving average as investors brace for the company’s fiscal fourth-quarter earnings report. Intel shares have averaged a 9.7% decline over the past six quarters, exceeding the implied option straddle move four times out of six. Analysts expect the company to announce $0.91 in earnings per share (EPS) and $18.36 billion in revenue. Intel was one of few companies to underperform in 2021, and investors will be anxious to see if the chipmaker can buck the trend.
Intel has surprisingly outperformed the technology sector and semiconductor industry so far in 2022. The company recently announced plans to invest more than $20 billion in two new semiconductor plants in Ohio, and CEO Pat Gelsinger recently returned to Intel.
Recent news could be why option traders appear to be placing bullish bets on the Intel share price in the near term. The open interest for Intel seems to illustrate that traders are buying call options and selling puts. This bullish options activity has continued despite the Intel share price recently falling below its 20-day moving average.
Macro Performance and Options Look:
Intel’s performance against the wider market is intriguing considering the recent activity of options traders. At first glance, it appears option traders are bullish toward Intel stock, as recent trading volumes featured 145,000 calls compared to 108,000 puts.
The open interest for Intel is likewise bullish at first glance, as it features 1.3 million calls compared to 943,000 puts. Order sentiment remains bullish as well, as 71% of the total contracts traded over the past month have been call options.
For the Jan. 28 expiration date, the open interest features 60,000 calls compared to 45,000 puts. Out-of-the-money call options also decline at a much slower rate than out-of-the-money puts. The single option with the highest open interest is the $55 call, with 6,800. This represents a 5% upside to the current share price of Intel.
Intel Long (Buy)
Enter at: 51.93