One of the standouts of today's afternoon trading session has been Intel, which logged a -27.2% drop and underperformed the S&P 500 by -25.0%. The Semiconductors stock is now trading at $21.15 per share and is -44.37% below its average target price of $38.02. Analysts have set target prices ranging from $17.0 to 68.0 dollars per share, and have given the stock an average rating of hold.
The market sentiment on the stock is decidedly optimistic, since Intel has a short interest of only 2.2%. This is the percentage of the share float that is being shorted. Each short position represents an investor's expectation that the price of the stock will decrease in the future.
Short selling involves borrowing shares and then selling them at current market prices. In the successful version of the strategy, the shares are purchased at a lower price at some time in the future. The investor then returns the shares to the lender, and keeps the profit made on the sell/buy transaction.
One way to get an idea of the market sentiment on a stock is to check its rate of institutional ownership. In the case of Intel, institutional investors own 69.4% of the shares, which indicates they have a very high stake in the company. What does this really tell us?
Institutional investors such as hedge funds, investment firms, and wealth managers devote significant resources to identifying good investments. If they have decided to invest in INTC, it probably means they believe it is a solid investment choice.
But it could also mean they are buying up shares in an effort to acquire the company or to get seats on the board of directors. Also bear in mind that institutions are fallible (just maybe not quite as fallible as the average retail investor), so they may simply be wrong when they think they've found a good stock.
To sum up, Intel is probably the subject of mixed market sentiment because of an analyst consensus of strong upside potential, a hold rating, an average amount of shares sold short, and an average number of institutional investors. At Market Inference, we believe that any investment decision should be preceded by an in-depth analysis of the company's fundamental values and a comparison with similar stocks.
Here's a snapshot of some important facts to keep in mind about INTC:
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The stock has trailing 12 month earnings per share (EPS) of $0.24
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Intel has a trailing 12 month Price to Earnings (P/E) ratio of 88.1 compared to the S&P 500 average of 28.21
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The company has a Price to Book (P/B) ratio of 0.78 in contrast to the S&P 500's average ratio of 4.71
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Intel is a Technology company, and the sector average P/E and P/B ratios are 31.58 and 4.11 respectively
