Back to top

Image: Bigstock

Will Analog Strength Aid Texas Instruments (TXN) Q3 Earnings?

Read MoreHide Full Article

Texas Instruments (TXN - Free Report) or TI is scheduled to report third-quarter 2018 results on Oct 23, after the bell.

The company surpassed the Zacks Consensus Estimate in all the trailing four quarters, with an average positive surprise of 5.38%.

We expect the company to perform well on the back of strength in several higher-margin and high-growth market areas. Also, it is gradually expanding its exposure in industrial and automotive markets, which should benefit the upcoming results.

We observe that shares of Texas Instruments have returned 8.6% over the past 12 months, underperforming the industry’s rally of 15.1%.



Expectations from Analog

TI’s analog business has been recording both sequential and year-over-year growth over the last four quarters. This was driven by strong performance in almost all the product lines. In the last reported quarter, this segment generated $2.7 billion, up 12% from the year-ago quarter.

We expect this trend to continue in the to-be-reported quarter as well, given TI’s compelling product line and manufacturing efficiencies that include growing 300-millimeter Analog output. The Zacks Consensus Estimate for Analog segment revenues is currently pegged at $2.87 billion.

Expectations from Embedded Processing

In the second quarter, it generated $943 million, up 9% year over year.

This segment is also expected to do well in the to-be-reported quarter, provided the product lines remain strong. The Zacks Consensus Estimate for Embedded Processing revenues is currently pegged at $989 million.

Overall

TI has always been a well-executed company. Management remains focused on increasing its free cash flow per share and strengthening competitive advantages. However, increasing competition in the auto and industrial space, along with an unfavorable currency impact could impact its results.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or #3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.

Currently, Texas Instruments has a Zacks Rank #4 and an Earnings ESP of -0.33%, which make surprise prediction difficult. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are few stocks worth considering as our model shows that it has the right combination of elements to deliver an earnings beat in the upcoming releases.

Advanced Energy Industries (AEIS - Free Report) has an Earnings ESP of +2.70% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

AMETEK (AME - Free Report) has an Earnings ESP of +0.71% and a Zacks Rank #2.

Vishay Intertechnology (VSH - Free Report) has an Earnings ESP of +0.62% and Zacks Rank #2.

Wall Street’s Next Amazon

Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.

Click for details >>

Published in