Should You Buy Intel ETFs Ahead of Q3 Earnings?

Intel INTC is set to release third-quarter 2020 results today after market close. Being a market leader in e-commerce, it is worth taking a look at the company’s fundamentals ahead of its earnings.

Intel has been on a tough ride, losing about 12% over the past three months. The stock clearly underperformed the industry’s average growth of 11%. Although the company is likely to post an earnings decline, its stock might see an upturn given that the stay-at-home trend has bolstered the demand for gaming chips and data center business (read: 5 Reasons to Buy Semiconductor ETFs).

Inside Our Methodology

Intel has a Zacks Rank #3 (Hold) and an Earnings ESP of 0.00%. According to our surprise prediction methodology, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The stock saw no earnings estimate revision activity over the past 30 days for the to-be-reported quarter. The Zacks Consensus Estimate represents a substantial year-over-year decline of 22.5% for earnings and 5.1% for revenues. However, Intel’s earnings surprise history is impressive, with a beat of 15.30%, on average, in the last four quarters. The stock has a top VGM Score of A but falls under a bottom-ranked Zacks industry (bottom 18%).

The Zacks Consensus Estimate for the average target price is $59.65 with nearly 26% of the analysts giving a Strong Buy or a Buy rating ahead of the company’s earnings (see: all the Technology ETFs here).

Intel Corporation Price, Consensus and EPS Surprise

Intel Corporation price-consensus-eps-surprise-chart | Intel Corporation Quote

What to Watch

The world’s largest chipmaker is expected to benefit from an environment where digital services and computing performance are essential to live, work and stay connected. This has led to strong demand for cloud, notebook, memory and 5G products.  

Some analysts believe that Intel will benefit from a slight uptick in personal computer (PC) sales. Notably, PC sales witnessed the strongest growth in a decade during the third quarter buoyed by solid demand from consumers working and studying remotely. Overall, PC shipment grew 3.6% to 71.4 million with 90% growth coming from Chromebooks, according to Gartner (read: 5 Top-Ranked Tech ETFs to Buy on Decade's Strongest PC Growth).

However, Intel warned of delays in its next-generation chips in the last earnings report.

ETFs in Focus

Given this, ETFs with the highest allocation to this online behemoth will be in focus ahead of its earnings announcement. We have highlighted some of them in detail below:

First Trust NASDAQ Technology Dividend Index Fund TDIV

This fund provides exposure to dividend payers within the technology sector by tracking the Nasdaq Technology Dividend Index. The product has amassed $1.2 billion in its asset base while trading in volume of around 89,000 shares per day. It charges 50 bps in annual fees and holds about 85 securities in its basket. Of these firms, INTC takes the second spot, making up roughly 8% of the assets.

iShares PHLX Semiconductor ETF SOXX

This ETF follows the PHLX SOX Semiconductor Sector Index and offers exposure to 30 U.S. firms with INTC taking the fourth spot with 7.9% allocation. The fund has amassed $3.7 billion in its asset base and trades in volume of about 539,000 shares a day. The product charges a fee of 46 bps a year from its investors and has a Zacks ETF Rank #1 (Strong Buy) with a High risk outlook.

VanEck Vectors Semiconductor ETF SMH

This fund provides exposure to 25 securities by tracking the MVIS US Listed Semiconductor 25 Index. Intel occupies the third position with 5.8% of the assets. The product has managed assets worth $2.7 billion and charges 35 bps in annual fees and expenses. It is heavily traded with volume of more than 2.5 million shares per day and has a Zacks ETF Rank #1 with a High risk outlook (read: Semiconductor ETFs Sizzling Ahead of Q3 Earnings).

First Trust Nasdaq Semiconductor ETF FTXL

This fund offers exposure to the most-liquid U.S. semiconductor securities based on volatility, value and growth by tracking the Nasdaq US Smart Semiconductor Index. Holding 31 stocks in its basket, Intel is the tenth firm accounting for 4% share. FTXL has accumulated $50.1 million in AUM and trades in average daily volume of 9,000 shares. It charges 0.60% in expense ratio and has a Zacks ETF Rank #1.

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Intel Corporation (INTC) : Free Stock Analysis Report
 
iShares PHLX Semiconductor ETF (SOXX): ETF Research Reports
 
VanEck Vectors Semiconductor ETF (SMH): ETF Research Reports
 
First Trust NASDAQ Technology Dividend ETF (TDIV): ETF Research Reports
 
First Trust NASDAQ Semiconductor ETF (FTXL): ETF Research Reports
 
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