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Texas Instruments (TXN) Down 3.5% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Texas Instruments (TXN - Free Report) . Shares have lost about 3.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Texas Instruments due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Texas Instruments Beats on Q2 Earnings
Texas Instruments 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 guided range of $1.62-$1.88.
However, the bottom line declined 24% year over year but improved 1.1% from the prior quarter..
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.
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.
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.
Texas Instruments expects earnings within $1.68-$1.92 per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
At this time, Texas Instruments has a poor Growth Score of F, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. 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) Down 3.5% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Texas Instruments (TXN - Free Report) . Shares have lost about 3.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Texas Instruments due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Texas Instruments Beats on Q2 Earnings
Texas Instruments 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 guided range of $1.62-$1.88.
However, the bottom line declined 24% year over year but improved 1.1% from the prior quarter..
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.
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.
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.
Texas Instruments expects earnings within $1.68-$1.92 per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
At this time, Texas Instruments has a poor Growth Score of F, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. 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.