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Texas Instruments (TXN) Down 3.5% Since Last Earnings Report: Can It Rebound?
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A month has gone by 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 the most recent earnings report in order to get a better handle on the important catalysts.
Texas Instruments Q4 Earnings Beat, Revenues Down Y/Y
Texas Instruments reported fourth-quarter 2023 earnings of $1.49 per share, surpassing the Zacks Consensus Estimate by 2.05%. Also, the figure was within the management’s guided range of $1.35-$1.57.
However, the figure declined 30% year over year and 19.5% sequentially.
TXN reported revenues of $4.08 billion, which lagged the Zacks Consensus Estimate of $4.11 billion. The figure came within the management’s guidance of $3.93-$4.27 billion.
Revenues decreased 13% from the year-ago quarter’s level and 10% sequentially.
The year-over-year decline was attributed to weakness across various end markets. The company witnessed sluggishness in its Analog, Embedded Processing and Other segments.
On a sequential basis, Texas Instruments suffered from widespread weakness in the industrial and communication equipment markets.
A sequential decline by mid-single digits in the automotive market was a major concern.
Meanwhile, personal electronics remained flat while enterprise systems grew by low-single digits.
TXN’s growing investments in growth avenues and competitive advantages, including manufacturing, technology, product portfolio expansion and consistent returns to shareholders, are likely to instill investors’ optimism in the stock in the days ahead.
Segments in Detail
Analog: Revenues of $3.12 billion were generated from the segment (77% of total revenues), down 12% from the year-ago quarter’s level. The figure came above the Zacks Consensus Estimate of $3.05 billion.
Embedded Processing: Revenues amounted to $752 million (18% of total revenues), down 10% year over year. The figure lagged the Zacks Consensus Estimate of $826 million.
Other: Revenues totaled $205 million (5% of total revenues). The figure was down 25% from the prior-year quarter’s level and missed the consensus mark of $228 million.
Operating Details
Texas Instruments’ gross margin of 59.6% contracted 650 basis points (bps) from the year-ago quarter’s level.
As a percentage of revenues, selling, general and administrative expenses expanded 150 bps year over year to $438 million in the reported quarter.
Research and development expenses of $460 million expanded by 200 bps from the year-ago quarter’s level as a percentage of revenues.
The operating margin was 37.6%, which contracted 900 bps from the prior-year quarter’s number.
Balance Sheet & Cash Flow
As of Dec 31, 2023, the cash and short-term investment balance was $8.58 billion compared with $8.95 billion as of Sep 30, 2023.
At the end of the reported quarter, TXN had a long-term debt of $10.624 billion compared with $10.922 billion in the prior quarter.
The current debt was $599 million, up from $300 million at the end of third-quarter 2023.
Texas Instruments generated $1.92 billion of cash from operations, down from $1.94 billion in the previous quarter.
Capex was $1.15 billion in the reported quarter and free cash flow was $776 million.
Texas Instruments paid out dividends worth $1.18 billion in the reported quarter. It repurchased shares worth 65 million.
Guidance
For first-quarter 2024, TXN expects revenues between $3.45 billion and $3.75 billion.
The company expects earnings within $0.96-$1.16 per share.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -25.02% due to these changes.
VGM Scores
Currently, Texas Instruments has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the lowest quintile 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. It's no surprise Texas Instruments has a Zacks Rank #5 (Strong Sell). We expect a below average 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?
A month has gone by 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 the most recent earnings report in order to get a better handle on the important catalysts.
Texas Instruments Q4 Earnings Beat, Revenues Down Y/Y
Texas Instruments reported fourth-quarter 2023 earnings of $1.49 per share, surpassing the Zacks Consensus Estimate by 2.05%. Also, the figure was within the management’s guided range of $1.35-$1.57.
However, the figure declined 30% year over year and 19.5% sequentially.
TXN reported revenues of $4.08 billion, which lagged the Zacks Consensus Estimate of $4.11 billion. The figure came within the management’s guidance of $3.93-$4.27 billion.
Revenues decreased 13% from the year-ago quarter’s level and 10% sequentially.
The year-over-year decline was attributed to weakness across various end markets. The company witnessed sluggishness in its Analog, Embedded Processing and Other segments.
On a sequential basis, Texas Instruments suffered from widespread weakness in the industrial and communication equipment markets.
A sequential decline by mid-single digits in the automotive market was a major concern.
Meanwhile, personal electronics remained flat while enterprise systems grew by low-single digits.
TXN’s growing investments in growth avenues and competitive advantages, including manufacturing, technology, product portfolio expansion and consistent returns to shareholders, are likely to instill investors’ optimism in the stock in the days ahead.
Segments in Detail
Analog: Revenues of $3.12 billion were generated from the segment (77% of total revenues), down 12% from the year-ago quarter’s level. The figure came above the Zacks Consensus Estimate of $3.05 billion.
Embedded Processing: Revenues amounted to $752 million (18% of total revenues), down 10% year over year. The figure lagged the Zacks Consensus Estimate of $826 million.
Other: Revenues totaled $205 million (5% of total revenues). The figure was down 25% from the prior-year quarter’s level and missed the consensus mark of $228 million.
Operating Details
Texas Instruments’ gross margin of 59.6% contracted 650 basis points (bps) from the year-ago quarter’s level.
As a percentage of revenues, selling, general and administrative expenses expanded 150 bps year over year to $438 million in the reported quarter.
Research and development expenses of $460 million expanded by 200 bps from the year-ago quarter’s level as a percentage of revenues.
The operating margin was 37.6%, which contracted 900 bps from the prior-year quarter’s number.
Balance Sheet & Cash Flow
As of Dec 31, 2023, the cash and short-term investment balance was $8.58 billion compared with $8.95 billion as of Sep 30, 2023.
At the end of the reported quarter, TXN had a long-term debt of $10.624 billion compared with $10.922 billion in the prior quarter.
The current debt was $599 million, up from $300 million at the end of third-quarter 2023.
Texas Instruments generated $1.92 billion of cash from operations, down from $1.94 billion in the previous quarter.
Capex was $1.15 billion in the reported quarter and free cash flow was $776 million.
Texas Instruments paid out dividends worth $1.18 billion in the reported quarter. It repurchased shares worth 65 million.
Guidance
For first-quarter 2024, TXN expects revenues between $3.45 billion and $3.75 billion.
The company expects earnings within $0.96-$1.16 per share.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -25.02% due to these changes.
VGM Scores
Currently, Texas Instruments has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the lowest quintile 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. It's no surprise Texas Instruments has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.