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Jul 18, 2020

Grading Three Chip Manufacturers Ahead of Earnings

A number of the largest semiconductor manufacturers will be releasing earnings in the next few weeks. Intel (Nasdaq: INTC), STMicroelectronics (NYSE: STM), and Texas Instruments (Nasdaq: TXN) are all set to report in the next few days and I it would be worth looking at these three stocks ahead of the earnings reports.

Using Tickeron’s various tools I was able to look at the fundamentals, the technical analysis, the AI Trend Predictions, and the scorecards for all three stocks.

Tickeron has a positive outlook on this group and predicts a further increase by more than 4.00% within the next month. The likelihood of success is at 80%. During the last month, the daily ratio of advancing to declining volumes was 1.02 to 1.

The stocks exhibit a similar positive trend based on the Momentum indicator with an average likelihood of 72%.

Looking at the scorecard ratings, STM and Texas Instruments both have “strong buy” ratings while Intel has a “buy” rating. Both the 30-day and 7-day outlooks for the group are strong with the odds of moving up at 81% for the 30-day outlook and 82% for the 7-day outlook.

One of the most impressive findings for these three companies was from the Fundamental Screener. All three companies had numerous positive ratings without a single negative fundamental rating. There were some neutral ratings, but not a single negative rating.

We see that Texas Instruments has six positive, or bullish, fundamental ratings with only the Price Growth Rating coming in with a neutral reading of 37. Even that reading is close to being positive. Intel has four positive ratings and two neutral ratings. STM has three positive and three neutral ratings.

One thing that really jumped out at me was the Valuation Ratings of the three stocks. All three are considered undervalued at this time and ahead of earnings reports that can be a critical factor.

The technical analysis screener is almost as impressive, with only STMicroelectronics exhibiting any negative indicators. The stock moved above its upper Bollinger Band on July 13. Even though the signal was bearish, it only showed odds of success of 55%. That isn’t exactly a high conviction signal.

Intel shows three positive technical signals and two neutral ones. Texas Instruments shows three bullish signals and one neutral one. The technical indicators aren’t quite as impressive as the fundamental indicators, but they are still far more positive than most industries.

Something I find useful heading in to earnings reports is whether or not analysts have been making adjustments to their estimates. With these three companies, the estimates have all been ratcheted down a little in the past 90 days. Intel is expected to report earnings per share of $1.10 after reporting $1.06 last year. It is the only one of the three that is expected to show earnings growth compared to last year.

STMicroelectronics and Texas Instruments are both expected to show declines in their earnings when compared to the same period from last year.

What all of this suggests to me is that expectations have been lowered and when that happens it can make it easier for a company to clear the earnings hurdle.

Another factor in how a stock reacts to the earnings news is the sentiment toward the stock going in to the report. In the table above we see the analysts’ ratings and short interest ratios (SIR) for the three stocks. From a contrarian perspective, skepticism is a good thing. In the case of Intel and Texas Instruments, analysts are more skeptical of them than they are the average stock. This can help if the company delivers a better than expected report—it can create upgrades.

As for the short interest ratios, Intel’s is a little low and Texas Instruments is a little higher than average. STM is pretty average in terms of the analysts’ ratings as well as the short interest ratio.

All in all, I would say the outlook for Intel, STMicroelectronics, and Texas Instruments is pretty solid. The fundamentals are strong, the technical indicators are pointing to a bullish move, and none of the stocks show excessive optimism heading in to the earnings report. That is a pretty solid outlook for the group as a whole.

Related Ticker: INTC

INTC's MACD Histogram just turned positive

The Moving Average Convergence Divergence (MACD) for INTC turned positive on March 28, 2024. Looking at past instances where INTC's MACD turned positive, the stock continued to rise in of 47 cases over the following month. The odds of a continued upward trend are .

Price Prediction Chart

Technical Analysis (Indicators)

Bullish Trend Analysis

The Momentum Indicator moved above the 0 level on March 27, 2024. You may want to consider a long position or call options on INTC as a result. In of 87 past instances where the momentum indicator moved above 0, the stock continued to climb. The odds of a continued upward trend are .

INTC moved above its 50-day moving average on March 28, 2024 date and that indicates a change from a downward trend to an upward trend.

Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where INTC advanced for three days, in of 319 cases, the price rose further within the following month. The odds of a continued upward trend are .

The Aroon Indicator entered an Uptrend today. In of 217 cases where INTC Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are .

Bearish Trend Analysis

The Stochastic Oscillator entered the overbought zone. Expect a price pull-back in the foreseeable future.

Following a 3-day decline, the stock is projected to fall further. Considering past instances where INTC declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .

INTC broke above its upper Bollinger Band on March 07, 2024. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.

Fundamental Analysis (Ratings)

Fear & Greed

The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to outstanding earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.

The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is slightly undervalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (1.769) is normal, around the industry mean (7.394). P/E Ratio (110.425) is within average values for comparable stocks, (127.208). Projected Growth (PEG Ratio) (0.538) is also within normal values, averaging (2.455). Dividend Yield (0.011) settles around the average of (0.020) among similar stocks. P/S Ratio (3.431) is also within normal values, averaging (12.494).

The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating steady price growth. INTC’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.

The Tickeron Seasonality Score of (best 1 - 100 worst) indicates that the company is significantly overvalued in the industry. The Tickeron Seasonality score describes the variance of predictable price changes around the same period every calendar year. These changes can be tied to a specific month, quarter, holiday or vacation period, as well as a meteorological or growing season.

The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating weak sales and an unprofitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.

The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating that the returns do not compensate for the risks. INTC’s unstable profits reported over time resulted in significant Drawdowns within these last five years. A stable profit reduces stock drawdown and volatility. The average Profit vs. Risk Rating rating for the industry is 61, placing this stock worse than average.

Notable companies

The most notable companies in this group are NVIDIA Corp (NASDAQ:NVDA), Taiwan Semiconductor Manufacturing Company Ltd (NYSE:TSM), Broadcom (NASDAQ:AVGO), Advanced Micro Devices (NASDAQ:AMD), QUALCOMM (NASDAQ:QCOM), Intel Corp (NASDAQ:INTC), Applied Materials (NASDAQ:AMAT), Texas Instruments (NASDAQ:TXN), Micron Technology (NASDAQ:MU), Lam Research Corp (NASDAQ:LRCX).

Industry description

The semiconductor industry manufacturers all chip-related products, including research and development. These chips are used in innumerable electronic devices, including computers, cell phones, smartphones, and GPSs. Intel Corporation, NVIDIA Corp., and Broadcomm are some of the prominent players in this industry. Semiconductor companies usually tend to do well during periods of healthy economic growth, thereby inducing further research and development in the industry – which in turn augurs well for productivity and growth in the economy. In the near future, demand for semiconductor products (and possibly innovation within the segment) should only expand further, with the proliferation of 5G, autonomous vehicles, IoT, and various AI-driven electronics set to herald a new, advanced chapter in the technology-driven world as we know it. With burgeoning prospects comes great competition. In 2015, SIA estimated that U.S. semiconductor industry ranks as the second most competitive U.S. industry out of 2882 U.S. industries designated manufacturers by the U.S. Census Bureau.

Market Cap

The average market capitalization across the Semiconductors Industry is 42.72B. The market cap for tickers in the group ranges from 13.43K to 2.26T. NVDA holds the highest valuation in this group at 2.26T. The lowest valued company is CYBL at 13.43K.

High and low price notable news

The average weekly price growth across all stocks in the Semiconductors Industry was 1%. For the same Industry, the average monthly price growth was 1%, and the average quarterly price growth was 20%. GCTS experienced the highest price growth at 181%, while SLOIF experienced the biggest fall at -28%.

Volume

The average weekly volume growth across all stocks in the Semiconductors Industry was -32%. For the same stocks of the Industry, the average monthly volume growth was 10% and the average quarterly volume growth was 25%

Fundamental Analysis Ratings

The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows

Valuation Rating: 58
P/E Growth Rating: 51
Price Growth Rating: 49
SMR Rating: 66
Profit Risk Rating: 60
Seasonality Score: 2 (-100 ... +100)
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INTCDaily Signal changed days agoGain/Loss if shorted
 
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General Information

a manufacturer of computer components and related products

Industry Semiconductors

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Fundamentals
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Industry
Semiconductors
Address
2200 Mission College Boulevard
Phone
+1 408 765-8080
Employees
124800
Web
https://www.intel.com
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