Earnings season always garners the attention of investors and can lead to significant shifts in a company's stock. With that season currently upon us a lot of organizations are finding themselves as either winners or losers in the aftermath. Intel (INTC -4.88%) temporarily lost, the stock plunged on Friday following its third-quarter earnings release on Oct. 21. Investors sold their shares in the Silicon Valley-based chip giant as the company failed to meet expectations in a few areas. 

Nonetheless, while Intel must overcome significant challenges, the report is also showing signs that could eventually bring investors back into the semiconductor stock.

A reaction of joy as a computer user stares at a laptop.

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Intel's earnings disappointment

For the first nine months of 2021, the revenue of $58.5 billion represented about a 1% increase from the same period in 2020. Over that time, net income rose by 1% to just over $15.2 billion. However, amid this slow growth, the third-quarter numbers point to a 5% year-over-year gain in revenue and a 60% gain in net income over that same period.

Unfortunately for Intel, most of that net income gain came from equity investments. Also, Intel's 2021 revenue forecast predicts yearly non-GAAP revenue of $73.5 billion, a 5% drop from 2020. Even though analysts expected lower numbers given the temporary revenue bump from the 2020 pandemic, the news disappointed investors, and the stock fell 12% the next day. Investors also didn't like the news that gross margins will come in "below current levels."

1. The comeback plan

While it may be too early to know whether this period is the beginning of Intel's redemption, these lower gross margins could pay off for the company later. Gross margins will not fall due to performance but because Intel has made a plan to make an overdue move -- investing in itself.

To that end, Intel has changed its focus under new CEO Pat Gelsinger. The company will spend $20 billion to build two new factories (known as Fab 52 and Fab 62) in Arizona. These "fabs" will compete with the likes of Taiwan Semiconductor (TSMC) and the privately held GlobalFoundries, as it wants to build chips for fab-less chip companies. It also plans to develop 7nm chips, a move that could potentially mount a credible challenge to TSMC, as Intel seeks to regain industry leadership. Still, such moves may be a hard sell for investors. Intel stumbled for years to develop a chip smaller than 14nm. By the time it released its 10nm chip, rival Advanced Micro Devices (AMD -1.76%) had sold a 7nm chip for years.

Yet, the story of AMD's comeback may give hope to Intel bulls. When Lisa Su became CEO of AMD in 2014, she leveraged the chip development cycle to bring about her company's comeback and eventual technical lead. In the same manner, Gelsinger has called upon his engineering background to foment a technical comeback for Intel. Nonetheless, chip development cycles take three to five years. Even if Intel ultimately succeeds, Intel stockholders face years of uncertainty merely to find out if Intel can match or surpass TSMC.

2. The dividend

Although the payout appears to receive scant attention, Intel's dividend could draw interest from more income-oriented investors. The annual payout has risen in every year except one since 2004. Also, the dividend has increased annually for the past four years. 

The current annual payout of $1.39 per share yields about 2.8% at the stock's current price, which is more than double the S&P 500's average of 1.3%. Since the dividend has risen by approximately 5% per year in recent years, it closely approximates the current increase in inflation, according to the U.S. Bureau of Labor. This could broaden its appeal to income investors by providing some steady funds while they await gains.

3. The valuation

Right now investors can buy at a low price. Intel's price-to-earnings (P/E) ratio now stands at around 10. This is well below TSMC's earnings multiple of 31 and also comes in well below another dividend stalwart and fab operator in the U.S., Texas Instruments, at 26 times earnings.

Admittedly, with Intel's stagnant revenue growth in recent years, 10 may seem like a fair P/E ratio. But if it moves to build chips for clients and succeeds in catching up to TSMC technologically, investors will likely see this earnings valuation as a bargain. 

Is Intel stock worth considering?

As for whether Intel could stage a comeback, the answer is maybe. While the low P/E ratio and rising dividend yield will appeal to some, the company's prospects for success remain uncertain. This situation leaves Intel stock without an obvious catalyst to take it higher. Moreover, while the pandemic frontloaded some hardware spending in 2020, the forecasted drop in revenue for 2021 offers little comfort to investors anxious for signs of success.

Stockholders who buy Intel now may receive little in the way of returns beyond dividend payments for the foreseeable future. However, if it can build a successful foundry business and challenge TSMC technologically, it could bring massive dividend returns over time.