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What's in Store for Texas Instruments' (TXN) Q1 Earnings?

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Texas Instruments (TXN - Free Report) or TI is scheduled to report first-quarter 2021 results on Apr 26, after market close. In the last reported quarter, TI delivered an earnings surprise of 34.3%.

For the to-be-reported quarter, the Zacks Consensus Estimate for earnings has remained stable at $1.56 per share over the past 30 days. Notably, the figure indicates an increase of 25.8% from the year-ago reported figure.

The consensus mark for revenues is pegged at $3.97 billion, implying an increase of 19.3% from the year-ago reported figure.

Let’s see how things have shaped up for this announcement.

The company is expected to have performed well in the quarter driven by strong recovery in the automotive market and growing demand for personal electronics.

Personal electronics is expected to have been driven by the need for remote working and entertainment amid the pandemic situation, which in turn is likely to have benefited Texas Instruments in the quarter.

Markedly, demand for PCs and servers that power data centers is expected to have increased in the quarter to be reported, as people were increasingly working from home due to the pandemic.

These are expected to have aided top-line numbers in the quarter.

The company’s compelling product line and manufacturing efficiencies, which include growing 300-millimeter Analog output, are likely to have helped this segment achieve growth during the quarter.

Further, its strong investments in new growth avenues and competitive advantages are expected to have been key catalysts.

Also, a weak macro environment resulting from the U.S.-China trade war and second wave of the COVID-19 pandemic is expected to have impacted the company in the quarter.

The Zacks Consensus Estimate for Embedded Processing revenues is currently pegged at $715 million, suggesting an increase of 9.5% from the year-ago quarter. For the Analog segment, the Zacks Consensus Estimate for revenues is currently pegged at $3.08 billion, indicating a 25.4% year-over-year increase.

For first-quarter 2021, the company expects revenues between $3.79 billion and $4.11 billion. Earnings are expected in the range of $1.44-$1.66 per share.

Overall Picture

TI has always been a well-executed company. Management has been focused on increasing its free cash flow per share and strengthening competitive advantages. However, increasing competition in the auto and industrial space, along with unfavorable currency impact might have hurt the company’s first-quarter performance.

What Our Model Says

Our proven model predicts an earnings beat for Texas Instruments this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is the case here.

Currently, the company has a Zacks Rank #2 and an Earnings ESP of +4.25%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Other Stocks to Consider

Here are a few other stocks that you may also want to consider, as our model shows that these too have the right combination of elements to post an earnings beat in the quarter to be reported.

Waters Corporation (WAT - Free Report) has an Earnings ESP of +2.94% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Verizon Communications Inc. (VZ - Free Report) has an Earnings ESP of +0.41% and a Zacks Rank #3.

NXP Semiconductors N.V. (NXPI - Free Report) has an Earnings ESP of +2.26% and a Zacks Rank #3.

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