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Texas Instruments (TXN - Free Report) reported third-quarter 2022 earnings of $2.47 per share. The figure was within the management’s guided range of $2.23-$2.51. Further, the figure grew 19% year over year and 0.8% from the previous quarter’s level.
The bottom line includes a benefit of 2 cents, excluding which the figure stands at $2.45, beating the Zacks Consensus Estimate by 3.4%.
TXN reported revenues of $5.24 billion, which improved 13% from the year-ago quarter’s level and 1% sequentially. The top line was near the higher end of management’s guided range of $4.9-$5.3 billion. Also, revenues surpassed the Zacks Consensus Estimate of $5.11 billion.
Year-over-year top-line growth was driven by well-performing Analog, Embedded Processing and Other segments.
Sequential growth in automotive, communication equipment and enterprise systems markets remained a positive.
However, softness in the personal electronics and industrial end-markets was a concern.
Shares of Texas Instruments have lost 18.3% on a year-to-date basis compared with the industry’s decline of 48.2%.
Shares of TXN dropped 5.1% in after-hours trading, primarily due to a weaker-than-expected outlook for fourth-quarter revenues and earnings. Moreover, the outlook shows signs of deteriorating chip demand across various sectors.
Nevertheless, Texas Instruments’ efficient manufacturing strategies and continuous returns to its shareholders are likely to instill investors’ optimism on the stock. Its substantial investments in growth avenues and competitive advantages are other positives.
Texas Instruments Incorporated Price, Consensus and EPS Surprise
Analog: Revenues of $3.99 billion were generated from the segment (76.2% of total revenues), up 13% from the year-ago quarter’s level.
Embedded Processing: Revenues summed $821 million (15.7% of total revenues), up 11% year over year.
Other: Revenues totaled $427 million (8.1% of total revenues). The figure was up 20% from the prior-year quarter’s level.
Operating Details
Texas Instruments’ gross margin of 69% expanded 110 basis points (bps) from the year-ago quarter’s level.
As a percentage of revenues, selling, general and administrative expenses contracted 70 bps year over year to $431 million in the reported quarter.
Research and development expenses of $431 million contracted 20 bps from the year-ago quarter’s level as a percentage of revenues.
The operating margin was 51.1%, which expanded 150 bps from the prior-year quarter’s number.
Balance Sheet & Cash Flow
As of Sep 30, 2022, the cash and short-term investment balance was $9.1 billion compared with $8.4 billion as of Jun 30, 2022.
At the end of the reported quarter, TXN had a long-term debt of $7.4 billion compared with $6.7 billion in the prior quarter.
Current debt was $499 million in third-quarter 2022, flat sequentially.
Texas Instruments generated $2.8 billion of cash from operations, up from $1.8 billion in the previous quarter.
Capex was $790 million in the reported quarter. Free cash flow stood at $1.98 billion.
Texas Instruments paid out dividends worth $1.05 billion in the reported quarter. TXN repurchased shares worth $996 million.
Guidance
For fourth-quarter 2022, Texas Instruments expects revenues between $4.4 billion and $4.8 billion. The midpoint of this range is below the Zacks Consensus Estimate of $4.82 billion.
Texas Instruments expects earnings within $1.83-$2.11 per share. The Zacks Consensus Estimate for the same is pegged at $2.15 per share.
Zacks Rank and Stocks to Consider
Currently, Texas Instruments carries a Zacks Rank #3 (Hold).
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Texas Instruments (TXN) Q3 Earnings & Revenues Beat, Rise Y/Y
Texas Instruments (TXN - Free Report) reported third-quarter 2022 earnings of $2.47 per share. The figure was within the management’s guided range of $2.23-$2.51. Further, the figure grew 19% year over year and 0.8% from the previous quarter’s level.
The bottom line includes a benefit of 2 cents, excluding which the figure stands at $2.45, beating the Zacks Consensus Estimate by 3.4%.
TXN reported revenues of $5.24 billion, which improved 13% from the year-ago quarter’s level and 1% sequentially. The top line was near the higher end of management’s guided range of $4.9-$5.3 billion. Also, revenues surpassed the Zacks Consensus Estimate of $5.11 billion.
Year-over-year top-line growth was driven by well-performing Analog, Embedded Processing and Other segments.
Sequential growth in automotive, communication equipment and enterprise systems markets remained a positive.
However, softness in the personal electronics and industrial end-markets was a concern.
Shares of Texas Instruments have lost 18.3% on a year-to-date basis compared with the industry’s decline of 48.2%.
Shares of TXN dropped 5.1% in after-hours trading, primarily due to a weaker-than-expected outlook for fourth-quarter revenues and earnings. Moreover, the outlook shows signs of deteriorating chip demand across various sectors.
Nevertheless, Texas Instruments’ efficient manufacturing strategies and continuous returns to its shareholders are likely to instill investors’ optimism on the stock. Its substantial investments in growth avenues and competitive advantages are other positives.
Texas Instruments Incorporated Price, Consensus and EPS Surprise
Texas Instruments Incorporated price-consensus-eps-surprise-chart | Texas Instruments Incorporated Quote
Segments in Detail
Analog: Revenues of $3.99 billion were generated from the segment (76.2% of total revenues), up 13% from the year-ago quarter’s level.
Embedded Processing: Revenues summed $821 million (15.7% of total revenues), up 11% year over year.
Other: Revenues totaled $427 million (8.1% of total revenues). The figure was up 20% from the prior-year quarter’s level.
Operating Details
Texas Instruments’ gross margin of 69% expanded 110 basis points (bps) from the year-ago quarter’s level.
As a percentage of revenues, selling, general and administrative expenses contracted 70 bps year over year to $431 million in the reported quarter.
Research and development expenses of $431 million contracted 20 bps from the year-ago quarter’s level as a percentage of revenues.
The operating margin was 51.1%, which expanded 150 bps from the prior-year quarter’s number.
Balance Sheet & Cash Flow
As of Sep 30, 2022, the cash and short-term investment balance was $9.1 billion compared with $8.4 billion as of Jun 30, 2022.
At the end of the reported quarter, TXN had a long-term debt of $7.4 billion compared with $6.7 billion in the prior quarter.
Current debt was $499 million in third-quarter 2022, flat sequentially.
Texas Instruments generated $2.8 billion of cash from operations, up from $1.8 billion in the previous quarter.
Capex was $790 million in the reported quarter. Free cash flow stood at $1.98 billion.
Texas Instruments paid out dividends worth $1.05 billion in the reported quarter. TXN repurchased shares worth $996 million.
Guidance
For fourth-quarter 2022, Texas Instruments expects revenues between $4.4 billion and $4.8 billion. The midpoint of this range is below the Zacks Consensus Estimate of $4.82 billion.
Texas Instruments expects earnings within $1.83-$2.11 per share. The Zacks Consensus Estimate for the same is pegged at $2.15 per share.
Zacks Rank and Stocks to Consider
Currently, Texas Instruments carries a Zacks Rank #3 (Hold).
Investors interested in the broader Zacks Computer & Technology sector can consider some better-ranked stocks like Asure Software (ASUR - Free Report) , Aspen Technology (AZPN - Free Report) and Amdocs (DOX - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Asure Software has lost 14% in the year-to-date period. The long-term earnings growth rate for ASUR is currently projected at 32.8%.
Aspen Technology has returned 62.4% in the year-to-date period. The long-term earnings growth rate for AZPN is currently projected at 18.2%.
Amdocs has gained 8.9% in the year-to-date period. The long-term earnings growth rate for DOX is currently projected at 11.5%.