Alcoa started off earnings season with a bang yesterday. Now the earnings reports are starting to arrive fast and furious. Intel's (Nasdaq: INTC) eagerly anticipated report shows up Tuesday. Will it be good enough to keep the rally alive?

What analysts say:

  • Buy, sell, or waffle? Fifty analysts follow Intel. (I kid you not. Fifty.) Of that bunch, 27 say the stock's a buy. Nineteen rate Intel a hold, while only four say sell.
  • Revenue. On average, these analysts predict that Intel will report $11 billion in Q3 sales, up 17% from last year.
  • Earnings. Profits could reach $0.50 per share, a 52% year-over-year increase.

What management says
Good numbers, you say? They could have been better. Intel knocked expectations down to their current levels with an "earnings warning" in August. Management advised investors to expect sales of $11 billion "plus or minus $200 million" (so there's room for improvement.) Gross margin could come in anywhere from 65% to 67% -- no worse than the previous worst-case scenario, but a lower ceiling than previously hoped.

What management does
Call me a glass-half-Fool, but I really don't think this news looks too bad. After all, Intel's done a great job of growing its gross, operating, and net profit margins over the past few quarters. For that matter, even a worst-case 65% gross would beat AMD's (NYSE: AMD) average score for the past year by a good 20 percentage points.

Margins

March 2009

June 2009

September 2009

December 2009

March 2010

June 2010

Gross

45.3%

50.8%

57.6%

64.7%

63.4%

67.2%

Operating

10.1%

19.0%

28.1%

35.5%

33.5%

37.0%

Net

8.8%

(5.0%)

19.8%

21.6%

23.7%

26.8%

Source: Capital IQ, a division of Standard & Poor's. Data reflect trailing-12-month performance for the quarters ended in the named months.

One Fool says
Intel's biggest criticism these days seems to be that the company has missed the boat on "mobile computing." Reportedly, it ceded the field to Texas Instruments (NYSE: TXN), Marvell Technology (Nasdaq: MRVL), and Qualcomm (Nasdaq: QCOM), and sat on its hands as ARM Holdings (Nasdaq: ARMH) based processors ran away with the best ideas for powering smartphones, netbooks, and tablet PCs.

Intel is moving quickly to lay these concerns to rest, though, buying Infineon's "Wireless Solutions" business to shore up that gap. And with $11 billion in annual free cash flow to fund any other necessary repairs to its business plan, Intel remains a strong contender -- and a bargain-priced stock.

Whatever happens tomorrow, keep your eye on the prize. Valuation always matters, and Intel is cheap.