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Texas Instruments (TXN) Q2 Earnings & Revenues Beat, Fall Y/Y
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Texas Instruments (TXN - Free Report) reported second-quarter 2023 earnings of $1.87 per share, beating the Zacks Consensus Estimate by 6.2%. The figure is near the higher end of management’s guidance of $1.62-$1.88.
However, the bottom line declined 24% year over year but improved 1.1% year over year.
TXN reported revenues of $4.53 billion, which surpassed the Zacks Consensus Estimate of $4.36 billion. The figure also matched the higher end of management’s guidance.
However, revenues decreased 13% from the year-ago quarter’s level while increasing by 3% sequentially.
Year-over-year decline was attributed to a weak demand environment. The company witnessed sluggishness in its Analog and Other segments.
On the other hand, the Embedded Processing segment delivered improved performance on a year-over-year basis.
On a sequential basis, Texas Instruments suffered from widespread weakness in the communication equipment and enterprise systems markets. The industrial end market also remained flat.
It experienced sequential growth in the automotive end market, which remains a positive. TXN experienced an improvement in the personal electronics market from the prior quarter.
The company’s shares plunged 3.3% in after-hours trading, which can be primarily attributed to a weak outlook for the current quarter.
We note that Texas Instruments’ efficient manufacturing strategies and consistent returns to shareholders are likely to instill investors’ optimism on the stock. Its substantial investments in growth avenues and competitive advantages are other positives.
Shares of Texas Instruments have gained 14.2% in the year-to-date period, underperforming the industry’s growth of 122.5%.
Texas Instruments Incorporated Price, Consensus and EPS Surprise
Analog: Revenues of $3.28 billion were generated from the segment (72.3% of total revenues), down 18% from the year-ago quarter’s level. The figure came above the Zacks Consensus Estimate of $3.27 billion.
Embedded Processing: Revenues summed up to $894 million (19.7% of total revenues), up 9% year over year. The figure beat the Zacks Consensus Estimate of $815 million.
Other: Revenues totaled $359 million (8% of total revenues). The figure was down 10% from the prior-year quarter’s level. The reported revenue surpassed the consensus mark of $261 million.
Operating Details
Texas Instruments’ gross margin of 64.2% contracted 540 basis points (bps) from the year-ago quarter’s level.
As a percentage of revenues, selling, general and administrative expenses expanded 210 bps year over year to $461 million in the reported quarter.
Research and development expenses of $477 million expanded 260 bps from the year-ago quarter’s level as a percentage of revenues.
The operating margin was 43.5%, which contracted 870 bps from the prior-year quarter’s number.
Balance Sheet & Cash Flow
As of Jun 30, 2023, the cash and short-term investment balance was $9.55 billion compared with $9.54 billion as of Mar 31, 2023.
At the end of the reported quarter, TXN had a long-term debt of $10.9 billion compared with $9.6 billion in the prior quarter.
Current debt was $299 million, down from $500 million at the end of first-quarter 2023.
Texas Instruments generated $1.39 billion of cash from operations, up from $1.16 billion in the previous quarter.
Capex was $1.45 billion in the reported quarter. Free cash flow stood at ($47) million.
Texas Instruments paid out dividends worth $1.12 billion in the reported quarter. TXN repurchased shares worth $79 million.
Guidance
For third-quarter 2023, Texas Instruments expects revenues between $4.36 billion and $4.74 billion. The midpoint of this range is below the Zacks Consensus Estimate of $4.59 billion.
Texas Instruments expects earnings within $1.68-$1.92 per share. The midpoint of this range is below the Zacks Consensus Estimate of $1.91 per share.
Zacks Rank and Stocks to Consider
Currently, Texas Instruments carries a Zacks Rank #3 (Hold).
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Texas Instruments (TXN) Q2 Earnings & Revenues Beat, Fall Y/Y
Texas Instruments (TXN - Free Report) reported second-quarter 2023 earnings of $1.87 per share, beating the Zacks Consensus Estimate by 6.2%. The figure is near the higher end of management’s guidance of $1.62-$1.88.
However, the bottom line declined 24% year over year but improved 1.1% year over year.
TXN reported revenues of $4.53 billion, which surpassed the Zacks Consensus Estimate of $4.36 billion. The figure also matched the higher end of management’s guidance.
However, revenues decreased 13% from the year-ago quarter’s level while increasing by 3% sequentially.
Year-over-year decline was attributed to a weak demand environment. The company witnessed sluggishness in its Analog and Other segments.
On the other hand, the Embedded Processing segment delivered improved performance on a year-over-year basis.
On a sequential basis, Texas Instruments suffered from widespread weakness in the communication equipment and enterprise systems markets. The industrial end market also remained flat.
It experienced sequential growth in the automotive end market, which remains a positive. TXN experienced an improvement in the personal electronics market from the prior quarter.
The company’s shares plunged 3.3% in after-hours trading, which can be primarily attributed to a weak outlook for the current quarter.
We note that Texas Instruments’ efficient manufacturing strategies and consistent returns to shareholders are likely to instill investors’ optimism on the stock. Its substantial investments in growth avenues and competitive advantages are other positives.
Shares of Texas Instruments have gained 14.2% in the year-to-date period, underperforming the industry’s growth of 122.5%.
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 $3.28 billion were generated from the segment (72.3% of total revenues), down 18% from the year-ago quarter’s level. The figure came above the Zacks Consensus Estimate of $3.27 billion.
Embedded Processing: Revenues summed up to $894 million (19.7% of total revenues), up 9% year over year. The figure beat the Zacks Consensus Estimate of $815 million.
Other: Revenues totaled $359 million (8% of total revenues). The figure was down 10% from the prior-year quarter’s level. The reported revenue surpassed the consensus mark of $261 million.
Operating Details
Texas Instruments’ gross margin of 64.2% contracted 540 basis points (bps) from the year-ago quarter’s level.
As a percentage of revenues, selling, general and administrative expenses expanded 210 bps year over year to $461 million in the reported quarter.
Research and development expenses of $477 million expanded 260 bps from the year-ago quarter’s level as a percentage of revenues.
The operating margin was 43.5%, which contracted 870 bps from the prior-year quarter’s number.
Balance Sheet & Cash Flow
As of Jun 30, 2023, the cash and short-term investment balance was $9.55 billion compared with $9.54 billion as of Mar 31, 2023.
At the end of the reported quarter, TXN had a long-term debt of $10.9 billion compared with $9.6 billion in the prior quarter.
Current debt was $299 million, down from $500 million at the end of first-quarter 2023.
Texas Instruments generated $1.39 billion of cash from operations, up from $1.16 billion in the previous quarter.
Capex was $1.45 billion in the reported quarter. Free cash flow stood at ($47) million.
Texas Instruments paid out dividends worth $1.12 billion in the reported quarter. TXN repurchased shares worth $79 million.
Guidance
For third-quarter 2023, Texas Instruments expects revenues between $4.36 billion and $4.74 billion. The midpoint of this range is below the Zacks Consensus Estimate of $4.59 billion.
Texas Instruments expects earnings within $1.68-$1.92 per share. The midpoint of this range is below the Zacks Consensus Estimate of $1.91 per share.
Zacks Rank and Stocks to Consider
Currently, Texas Instruments carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector are Salesforce (CRM - Free Report) , Akamai Technologies (AKAM - Free Report) and AvidXchange (AVDX - Free Report) . Salesforce sports a Zacks Rank #1 (Strong Buy), and Akamai Technologies and AvidXchange carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Salesforce shares have gained 70.7% in the year-to-date period. The long-term earnings growth rate for CRM is currently projected at 19.25%.
Akamai shares have gained 9.5% in the year-to-date period. The long-term earnings growth rate for AKAM is currently projected at 10%.
AvidXchange shares have increased 21.1% in the year-to-date period. The long-term earnings growth rate for AVDX is currently projected at 22.90%.