Back to top

Analyst Blog

Texas Instruments (TXN - Analyst Report), or "TI,” is set to report fourth-quarter 2013 results on Jan 21. Last quarter, it posted a 1.75% negative surprise. Let us see how things are shaping up for this announcement.

Growth Factors this Past Quarter

TI’s third-quarter earnings missed the Zacks Consensus Estimate by a penny. However, revenues were up 6.5% sequentially but down 4.3% year over year. The sequential increase was driven by stronger demand in the computing, game console and handset markets that had been very weak in the last quarter.

TI’s gross margin of 54.8% was up 331 basis points (bps) sequentially and 528 bps from the year-ago quarter. The improving product mix led to higher gross margins in the third quarter.

Last month, TI narrowed its revenue and earnings expectations for the fourth quarter of 2013. TI now expects revenues around $2.92 billion–$3.04 billion, the mid-point being above the Zacks Consensus Estimate of $2.99 billion. The earnings per share guidance is expected in the range of 44 cents–48 cents.

Earnings Whispers?

Our proven model does not conclusively show that Texas Instruments will beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESPand a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP:  Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 47 cents. Hence, the difference is 0.00%.

Zacks Rank #3 (Hold): TI’s Zacks Rank when combined with a 0.00% ESP makes surprise prediction difficult.

We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

You could consider other stocks with a positive earnings ESP and Zacks Rank #1, 2 or 3 such as:

Bally Technologies, Inc. (BYI - Snapshot Report) with Earnings ESP of +3.13% and a Zacks Rank #1 (Strong Buy)

Western Digital Corporation (WDC - Analyst Report) with Earnings ESP of +0.48% and a Zacks Rank #1

Cirrus Logic Inc. (CRUS - Snapshot Report) with Earnings ESP of +4.41% and a Zacks Rank #1

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
FELCOR LODG… FCH 10.47 +3.46%
OLD DOMINIO… ODFL 63.48 +1.18%
VASCO DATA… VDSI 13.57 +0.67%
AMEDISYS IN… AMED 20.18 +0.10%
LENOVO GROU… LNVGY 27.07 +0.04%