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Texas Instruments Q3 Earnings Beat: Can Strong Results Lift the Stock?
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Texas Instruments (TXN - Free Report) reported third-quarter 2024 earnings of $1.47 per share, which surpassed the Zacks Consensus Estimate by 8.1%. The figure came at the higher end of the guided range of $1.24-$1.48 per share. However, the figure declined 20.5% year over year.
TXN reported revenues of $4.15 billion, which beat the Zacks Consensus Estimate by 1%. The figure came at the higher end of management’s guidance of $3.94-$4.26 billion. Revenues decreased 8.4% year over year and increased 8.6% sequentially.
Due to continued cyclical recovery, TXN’s Personal Electronics end market grew around 30%, Enterprise Systems was up around 20%, and Communication Equipment was up around 25%. The automotive market also grew in high single digits buoyed by strength in the Chinese end market while the industrial market was down low-single digits due to customers’ inventory challenges.
The stronger-than-expected quarterly performance might give a fresh boost to TXN stock, which has underperformed the Zacks Semiconductor – General industry in the year so far. The stock has gained 13.8% year to date, while the industry has soared 134.8% during the same time frame.
Texas Instruments Incorporated Price, Consensus and EPS Surprise
Analog: Revenues of $3.22 billion were generated from the segment (77.6% of total revenues), down 4% from the year-ago quarter’s level. The figure came above the Zacks Consensus Estimate of $3.08 billion.
Embedded Processing: Revenues amounted to $653 million (15.7% of total revenues), down 26.6% year over year. The figure missed the Zacks Consensus Estimate of $724 million.
Other: Revenues totaled $275 million (6.6% of total revenues), down 4.7% from the prior-year quarter’s level. The figure lagged the consensus mark of $288.3 million.
Texas Instrument’s Operating Details
Texas Instruments’ gross margin of 59.6% contracted 251 basis points (bps) from the year-ago quarter’s level.
As a percentage of revenues, selling, general and administrative expenses contracted 34 bps year over year to $428 million in the reported quarter.
Research and development expenses of $492 million expanded 146 bps from the year-ago quarter’s level as a percentage of revenues.
The operating margin was 37.44%, which contracted 431 bps from the prior-year quarter’s number.
TXN’s Balance Sheet & Cash Flow
As of Sept. 30, 2024, the cash and short-term investment balance was $8.75 billion compared with $9.7 billion as of June 30, 2024.
At the end of the reported quarter, TXN’s long-term debt of $12.84 billion remained almost the same compared to the previous quarter. The current debt was $1.05 billion, the same as the previous quarter.
Texas Instruments generated $1.7 billion of cash from operations, up from $1.57 billion in the previous quarter.
Capex was $1.3 billion in the reported quarter, and the company reported a free cash flow of $416 million.
Texas Instruments paid out dividends worth $1.19 billion in the reported quarter. It repurchased shares worth $318 million.
Texas Instrument’s Guidance
For fourth-quarter 2024, TXN expects revenues between $3.70 billion and $4 billion. The Zacks Consensus Estimate for fourth-quarter 2024 revenues is currently pegged at $4.11 billion, indicating an increase of 0.83% from the year-ago quarter.
The company expects earnings per share between $1.07 and $1.29. The consensus mark for the same is pegged at $1.36 per share, indicating a fall of 8.7% from the year-ago quarter.
The company expects the effective tax rate to be approximately 13%.
TXN’s Zacks Rank & Stocks to Consider
Texas Instruments currently carries a Zacks Rank #3 (Hold).
The consensus mark for CyberArk’s 2024 earnings has been revised upward by 2 cents to $2.29 per share over the past 60 days, indicating a 104.5% year-over-year increase. The long-term expected earnings growth rate for the stock stands at 33.4%. The stock of CYBR has soared 40.8% in the year-to-date period.
The Zacks Consensus Estimate for FFIV’s fiscal 2024 earnings has been revised downward by a penny to $13.15 per share in the past seven days, suggesting a year-over-year increase of 12.4%. It has a long-term earnings growth expectation of 7.8%. Shares of FFIV have declined 21.3% in the year-to-date period.
The Zacks Consensus Estimate for Fortinet’s 2024 earnings has been revised upward by a penny to $2.01 per share in the past 60 days, indicating an increase of 23.31% on a year-over-year basis. It has a long-term earnings growth expectation of 16.3%. Shares of FTNT have jumped 40.8% in the year-to-date period.
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Texas Instruments Q3 Earnings Beat: Can Strong Results Lift the Stock?
Texas Instruments (TXN - Free Report) reported third-quarter 2024 earnings of $1.47 per share, which surpassed the Zacks Consensus Estimate by 8.1%. The figure came at the higher end of the guided range of $1.24-$1.48 per share. However, the figure declined 20.5% year over year.
TXN reported revenues of $4.15 billion, which beat the Zacks Consensus Estimate by 1%. The figure came at the higher end of management’s guidance of $3.94-$4.26 billion. Revenues decreased 8.4% year over year and increased 8.6% sequentially.
Due to continued cyclical recovery, TXN’s Personal Electronics end market grew around 30%, Enterprise Systems was up around 20%, and Communication Equipment was up around 25%. The automotive market also grew in high single digits buoyed by strength in the Chinese end market while the industrial market was down low-single digits due to customers’ inventory challenges.
The stronger-than-expected quarterly performance might give a fresh boost to TXN stock, which has underperformed the Zacks Semiconductor – General industry in the year so far. The stock has gained 13.8% year to date, while the industry has soared 134.8% during the same time frame.
Texas Instruments Incorporated Price, Consensus and EPS Surprise
Texas Instruments Incorporated price-consensus-eps-surprise-chart | Texas Instruments Incorporated Quote
TXN’s Segments in Detail
Analog: Revenues of $3.22 billion were generated from the segment (77.6% of total revenues), down 4% from the year-ago quarter’s level. The figure came above the Zacks Consensus Estimate of $3.08 billion.
Embedded Processing: Revenues amounted to $653 million (15.7% of total revenues), down 26.6% year over year. The figure missed the Zacks Consensus Estimate of $724 million.
Other: Revenues totaled $275 million (6.6% of total revenues), down 4.7% from the prior-year quarter’s level. The figure lagged the consensus mark of $288.3 million.
Texas Instrument’s Operating Details
Texas Instruments’ gross margin of 59.6% contracted 251 basis points (bps) from the year-ago quarter’s level.
As a percentage of revenues, selling, general and administrative expenses contracted 34 bps year over year to $428 million in the reported quarter.
Research and development expenses of $492 million expanded 146 bps from the year-ago quarter’s level as a percentage of revenues.
The operating margin was 37.44%, which contracted 431 bps from the prior-year quarter’s number.
TXN’s Balance Sheet & Cash Flow
As of Sept. 30, 2024, the cash and short-term investment balance was $8.75 billion compared with $9.7 billion as of June 30, 2024.
At the end of the reported quarter, TXN’s long-term debt of $12.84 billion remained almost the same compared to the previous quarter. The current debt was $1.05 billion, the same as the previous quarter.
Texas Instruments generated $1.7 billion of cash from operations, up from $1.57 billion in the previous quarter.
Capex was $1.3 billion in the reported quarter, and the company reported a free cash flow of $416 million.
Texas Instruments paid out dividends worth $1.19 billion in the reported quarter. It repurchased shares worth $318 million.
Texas Instrument’s Guidance
For fourth-quarter 2024, TXN expects revenues between $3.70 billion and $4 billion. The Zacks Consensus Estimate for fourth-quarter 2024 revenues is currently pegged at $4.11 billion, indicating an increase of 0.83% from the year-ago quarter.
The company expects earnings per share between $1.07 and $1.29. The consensus mark for the same is pegged at $1.36 per share, indicating a fall of 8.7% from the year-ago quarter.
The company expects the effective tax rate to be approximately 13%.
TXN’s Zacks Rank & Stocks to Consider
Texas Instruments currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector are CyberArk Software (CYBR - Free Report) , F5 Inc. (FFIV - Free Report) and Fortinet (FTNT - Free Report) . While CYBR sports a Zacks Rank #1 (Strong Buy), FFIV and FTNT carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today's Zacks #1 Rank stocks here.
The consensus mark for CyberArk’s 2024 earnings has been revised upward by 2 cents to $2.29 per share over the past 60 days, indicating a 104.5% year-over-year increase. The long-term expected earnings growth rate for the stock stands at 33.4%. The stock of CYBR has soared 40.8% in the year-to-date period.
The Zacks Consensus Estimate for FFIV’s fiscal 2024 earnings has been revised downward by a penny to $13.15 per share in the past seven days, suggesting a year-over-year increase of 12.4%. It has a long-term earnings growth expectation of 7.8%. Shares of FFIV have declined 21.3% in the year-to-date period.
The Zacks Consensus Estimate for Fortinet’s 2024 earnings has been revised upward by a penny to $2.01 per share in the past 60 days, indicating an increase of 23.31% on a year-over-year basis. It has a long-term earnings growth expectation of 16.3%. Shares of FTNT have jumped 40.8% in the year-to-date period.