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Texas Instruments (TXN) Up 0.4% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Texas Instruments (TXN - Free Report) . Shares have added about 0.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Texas Instruments due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Texas Instruments Beats on Q1 Earnings
Texas Instruments reported first-quarter 2022 earnings of $2.35 per share, which surpassed the Zacks Consensus Estimate by 8.3%. The bottom line exceeded management’s guidance of $2.01-$2.29 per share. Further, the figure rose 26% year over year and 3.5% sequentially.
The company reported revenues of $4.91 billion, which improved 14% from the year-ago quarter and 1.5% from the prior quarter. The top line surpassed management’s guidance of $4.5-$4.9 billion. Also, revenues beat the Zacks Consensus Estimate of $4.71 billion.
Top-line growth was driven by a solid demand environment across automotive and industrial end markets. Also, the growing momentum across the communication equipment and enterprise systems markets contributed well. Strong performance delivered by the Analog segment drove the results further.
However, softness in the personal electronics market was concerning.
The company anticipates China lockdowns to act as a headwind in second-quarter 2022. Due to this, it has provided weaker-than-expected guidance.
Nevertheless, the company’s efficient manufacturing strategies and continuous returns to shareholders are likely to instill investors’ optimism in the stock. Its substantial investments in growth avenues and competitive advantages are other positives.
The continuous rise in the demand for electronic components remains a major tailwind.
End-Market Details
Revenues in the industrial market grew 20% from the year-ago quarter, owing to a solid momentum across most sectors.
The company’s revenues generated from the automotive market also grew 20% from the year-ago quarter.
Revenues in the communications equipment market increased 10% year over year.
Enterprise systems’ revenues witnessed 35% year-over-year growth, owing to the strength in data center and enterprise computing.
However, revenues from the personal electronics market declined in the mid-single digits from the year-ago quarter.
Segments in Detail
Analog: The company generated $3.82 billion from the segment (77.8% of total revenues), which increased 16% from the year-ago quarter.
Embedded Processing: The segment generated $782 million in revenues (15.9% of total revenues), up 2% year over year.
Other: Revenues in the segment were $307 million (6.3% of total revenues). The figure was up 27% from the prior-year quarter.
Operating Details
Texas Instruments’ gross margin of 70.2% expanded 500 basis points (bps) from the year-ago quarter.
As a percentage of revenues, selling, general and administrative expenses contracted 130 bps year over year to $422 million in the reported quarter.
Research and development expenses of $391 million contracted 100 bps from the year-ago quarter as a percentage of revenues.
The operating margin was 52.2%, which expanded 700 bps from the prior-year quarter.
Balance Sheet & Cash Flow
As of Dec 31, 2021, the cash and short-term investment balance was $9.8 billion compared with $9.7 billion as of Dec 31, 2021.
At the end of the reported quarter, the company had long-term debt of $7.242 billion compared with $7.241 billion in the prior quarter.
Current debt was $500 million in first-quarter 2022, the same as fourth-quarter 2021.
The company generated $2.14 billion of cash from operations, down from $2.36 billion in the previous quarter.
Capex was $443 million in the reported quarter. Further, free cash flow stood at $1.7 billion.
Texas Instruments paid out dividends worth $1.06 billion in the reported quarter. The company repurchased shares worth $589 million.
Guidance
For second-quarter 2022, Texas Instruments expects revenues between $4.2 billion and $4.8 billion.
Earnings are expected to be $1.84-$2.26 per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -9.04% due to these changes.
VGM Scores
Currently, Texas Instruments has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Texas Instruments has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Texas Instruments (TXN) Up 0.4% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Texas Instruments (TXN - Free Report) . Shares have added about 0.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Texas Instruments due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Texas Instruments Beats on Q1 Earnings
Texas Instruments reported first-quarter 2022 earnings of $2.35 per share, which surpassed the Zacks Consensus Estimate by 8.3%. The bottom line exceeded management’s guidance of $2.01-$2.29 per share. Further, the figure rose 26% year over year and 3.5% sequentially.
The company reported revenues of $4.91 billion, which improved 14% from the year-ago quarter and 1.5% from the prior quarter. The top line surpassed management’s guidance of $4.5-$4.9 billion. Also, revenues beat the Zacks Consensus Estimate of $4.71 billion.
Top-line growth was driven by a solid demand environment across automotive and industrial end markets. Also, the growing momentum across the communication equipment and enterprise systems markets contributed well. Strong performance delivered by the Analog segment drove the results further.
However, softness in the personal electronics market was concerning.
The company anticipates China lockdowns to act as a headwind in second-quarter 2022. Due to this, it has provided weaker-than-expected guidance.
Nevertheless, the company’s efficient manufacturing strategies and continuous returns to shareholders are likely to instill investors’ optimism in the stock. Its substantial investments in growth avenues and competitive advantages are other positives.
The continuous rise in the demand for electronic components remains a major tailwind.
End-Market Details
Revenues in the industrial market grew 20% from the year-ago quarter, owing to a solid momentum across most sectors.
The company’s revenues generated from the automotive market also grew 20% from the year-ago quarter.
Revenues in the communications equipment market increased 10% year over year.
Enterprise systems’ revenues witnessed 35% year-over-year growth, owing to the strength in data center and enterprise computing.
However, revenues from the personal electronics market declined in the mid-single digits from the year-ago quarter.
Segments in Detail
Analog: The company generated $3.82 billion from the segment (77.8% of total revenues), which increased 16% from the year-ago quarter.
Embedded Processing: The segment generated $782 million in revenues (15.9% of total revenues), up 2% year over year.
Other: Revenues in the segment were $307 million (6.3% of total revenues). The figure was up 27% from the prior-year quarter.
Operating Details
Texas Instruments’ gross margin of 70.2% expanded 500 basis points (bps) from the year-ago quarter.
As a percentage of revenues, selling, general and administrative expenses contracted 130 bps year over year to $422 million in the reported quarter.
Research and development expenses of $391 million contracted 100 bps from the year-ago quarter as a percentage of revenues.
The operating margin was 52.2%, which expanded 700 bps from the prior-year quarter.
Balance Sheet & Cash Flow
As of Dec 31, 2021, the cash and short-term investment balance was $9.8 billion compared with $9.7 billion as of Dec 31, 2021.
At the end of the reported quarter, the company had long-term debt of $7.242 billion compared with $7.241 billion in the prior quarter.
Current debt was $500 million in first-quarter 2022, the same as fourth-quarter 2021.
The company generated $2.14 billion of cash from operations, down from $2.36 billion in the previous quarter.
Capex was $443 million in the reported quarter. Further, free cash flow stood at $1.7 billion.
Texas Instruments paid out dividends worth $1.06 billion in the reported quarter. The company repurchased shares worth $589 million.
Guidance
For second-quarter 2022, Texas Instruments expects revenues between $4.2 billion and $4.8 billion.
Earnings are expected to be $1.84-$2.26 per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -9.04% due to these changes.
VGM Scores
Currently, Texas Instruments has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Texas Instruments has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.