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Is Intel Corporation (INTC) a Buy?

In mid July Intel Corporation (NASDAQ:INTC) reported its results for the second quarter of the year. Revenue was down 5% versus a year earlier, as shifts in consumer preferences continue to reduce demand for PCs and therefore for many of Intel Corporation (NASDAQ:INTC)l’s products. Operating expenses, including R&D and SGA, have not changed much and as a result the company recorded a 29% decline in net income. This is about in line with what Intel Corporation (NASDAQ:INTC) had experienced in the first quarter of the year. Markets have not been very positive on Intel Corporation (NASDAQ:INTC)’s prospects over the last year, and as a result the stock price is down 9% while the S&P 500 index has risen 25% over the same period.

Intel Corporation (NASDAQ:INTC) currently trades at 12 times trailing earnings; while Wall Street analysts expect some degree of increase in earnings per share next year (aided, we assume, by a continuation of the company’s buyback program), the level of improvement they are looking for is low and so the P/E multiple is 12 on that basis as well. Generally at that valuation investors should expect at least small increases in earnings per share in the future, so Intel Corporation (NASDAQ:INTC) would have to hold its net income steady going forward (and then generate EPS growth through repurchases) in order for the current price to make sense in value terms. As with many troubled tech companies, Intel does offer a high dividend yield (at least for now) at 3.9%, and so income investors who are comfortable with its future prospects may want to consider it.

Intel Corporation (INTC)We track quarterly 13F filings from hundreds of hedge funds and other notable investors as part of our work researching investment strategies; we have found, for example, that the most popular small cap stocks among hedge funds earn an average excess return of 18 percentage points per year (learn more about our small cap strategy). According to our database, billionaire Ken Fisher’s Fisher Asset Management owned about 19 million shares of Intel at the end of the first quarter of 2013 (find Fisher’s favorite stocks). Renaissance Technologies, founded by billionaire Jim Simons, reported a position of a little less than 17 million shares (see Renaissance’s stock picks).