Intel Corp Shows Strong Q2 Results and Free Cash Flow - Shorting INTC Puts is Still the Best Play
Intel Corp Shows Strong Q2 Results and Free Cash Flow - Shorting INTC Puts is Still the Best Play Mark R. Hake, CFA Sun, July 26, 2026 at 6:30 AM PDT 5 min read INTC Intel Corporation (INTC) exceeded analysts' expectations for Q2 revenue and earnings on July 23. In addition, after excluding a one-time payment, free cash flow (FCF) was positive. So, INTC looks cheap. One play is to short out-of-the-money puts. INTC was down about 4.6% on Friday, July 24, at $92.32 , after an initial after-hours jump. The stock is down over a third (-34.5%) from a peak of $140.94 on June 22. More News from Barchart Fed Decision, Tech Earnings and Other Can't Miss Items this Week Option Volatility And Earnings Report For July 27-31 Everyone Loves November Soybeans Right Now. History Doesn't! Markets move fast. Keep up by reading our FREE midday Barchart Brief newsletter for exclusive charts, analysis, and headlines. INTC stock - last 3 months - Barchart - July 24, 2026 But it could be worth significantly more; analysts have raised their 2027 revenue forecasts, and if it continues to generate positive cash flow, INTC stock could rise. This article will discuss this. Strong Results Intel's Q2 revenue was up 25.4% YoY, 11.6% higher than analysts' expectations, according to Seeking Alpha. It was strong across all product lines, especially Foundry production and data center products. In short, demand for its chips from AI-related applications is extremely strong and likely to continue. Moreover, earnings (on a non-GAAP basis) were up over 100% to 42 cents per share ($0.20) vs. analysts' $0.20 forecast. After deducting a one-time payment to a private equity fund to buy 100% control of its Ireland fabrication plant, free cash flow (FCF) was strong. This is even though management showed in its presentation that the payment should not be excluded from adjusted FCF figures. For example, Stock Analysis reported that the Q2 FCF was $4.45 billion. That represents 27.59% of its $16.128 billion in Q2 revenue. Moreover, over the past year, its FCF margin has turned positive at $2.83 billion, or almost 5% of revenue, i.e., a 4.96% trailing 12-month (TTM) FCF margin. This is likely to continue as management provided a strong earnings outlook. They projected 38 cents per share (EPS) for Q3, which would be significantly higher than last year's 23 cents EPS. Forecasting FCF and Price Targets As a result, analysts have now raised their 2027 revenue forecasts. They now project $70 billion in revenue for 2027, up from $66.17 billion as reported in my July 20 Barchart article. As a result, using an 8.5% FCF margin estimate (well below the Q2 29.59% margin but up from the 5.0% TTM margin, FCF could rise substantially to almost $6.0 billion: Story Continues $70.0 billion x 0.085 = $5.95 billion FCF Therefore, using a 1.0% FCF yield (i.e., 100x FCF), Intel's fair market value (FMV) could be worth $595 billion. That is over $129 billion more than its present market...
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