E Portfolio Hi-Lites: March 2021

Intel (INTC) reported fourth quarter revenues declined 1% to $20 billion with net income dropping 15% to $5.9 billion and EPS down 10% to $1.42. For the full 2020 year, revenues rose 8% to a record $77.9 billion with net income dipping 1% to $20.9 billion and EPS up 5% to $4.94. This was the fifth consecutive year of record revenues for Intel thanks to strong customer demand in the PC-centric business segment with fourth quarter PC unit growth up 33% led by record notebook sales. The company also achieved better than-expected data-centric results, including record Mobileye revenues. Return on shareholders’ equity for the year was a strong 25.8%, reflecting the underlying profitability of the business. Free cash flow increased 25% during the year to a record $21.1 billion with the company repurchasing 274.6 million shares of its common stock for $14.2 billion at a price of about $51.71 per share while paying $5.6 billion in dividends. Intel announced a 5% increase in the dividend for 2021 at an annualized rate of $1.39 per share. For the first quarter of 2021, Intel is forecasting revenue of $17.5 billion with an operating margin of 30% and EPS of $1.10. These results reflect the exclusion of the NAND memory business due to its pending sale. The exit of the NAND and McAfee businesses are expected to generate about $12 billion in proceeds. Intel announced that its board of directors appointed Pat Gelsinger as its new chief executive officer. Gelsinger is a highly respected CEO and industry veteran with more than four decades of technology and leadership experience, including 30 years at Intel where he began his career. During the past quarter, Intel’s stock jumped 34%. Hold.

Genuine Parts (GPC) reported 2020 revenues declined 6% to $16.5 billion with adjusted EPS of $5.27. Free cash flow more than tripled during the year to $1.9 billion thanks to the sale of accounts receivables, improved working capital trends and lower capital expenditures. During the year, the firm paid $453 million in dividends and repurchased $96 million of its common stock. Genuine Parts announced a 3% increase in its dividend for 2021 to an annual rate of $3.26 per share, marking the 65th consecutive year of increased dividends. The company has paid a dividend every year since going public in 1948 with the dividend currently yielding a solid 3.1%. Management expects a solid start to 2021 as the world recovers from COVID-19. Genuine Parts expects 2021 sales growth of 4% to 6% leading to EPS in the range of $5.55 to $5.75. Genuine Parts’ stock has quintupled over the last 21 years. Hold.

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