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Product Strength to Aid Texas Instruments' (TXN) Q3 Earnings

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Texas Instruments (TXN - Free Report) or TI is scheduled to report third-quarter 2019 results on Oct 22, after market close.

The company surpassed the Zacks Consensus Estimate in all the trailing four quarters, with the average being 5.07%.

Texas Instruments’ performance in the to-be-reported quarter could have been affected by weakness in overall demand, uncertain macro environment, and increased competition in the auto and industrial space. However, strength in several higher-margin and high-growth market areas is expected to have aided its earnings.

Texas Instruments Incorporated Price and EPS Surprise

 

Expectations From Analog

TI’s compelling product line and manufacturing efficiencies, which include growing 300-millimeter Analog output, are likely to have helped this segment to achieve growth during the quarter. However, weak performance of high-volume and power product lines could have affected its earnings. Also, reduced factory loading could have affected the segment’s performance.

The Zacks Consensus Estimate for Analog segment revenues is currently pegged at $2.63 billion, indicating 3.8% year-over-year increase.

Expectations From Embedded Processing

Weak performance of processors and connected microcontrollers, along with reduced factory loadings might have affected its earnings in the to-be-reported quarter.

The Zacks Consensus Estimate for Embedded Processing revenues is currently pegged at $810 million, suggesting an improvement of 2.5% from the year-ago quarter.

Overall Picture

TI has always been a well-executed company. Management remains focused on increasing its free cash flow per share and strengthening competitive advantages. However, increasing competition in the auto and industrial space, along with unfavorable currency impact might have hurt the company’s performance in the third quarter.

What Our Model Says

According to the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Currently, Texas Instruments has a Zacks Rank #4 (Sell) and an Earnings ESP of 0.00%, making surprise prediction difficult. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are a few stocks that you may want to consider, as our model shows that these have the right combination of elements to post a positive earnings surprise in the quarter to be reported.

Cadence Bancorp (CADE - Free Report) has an Earnings ESP of +6.12% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Veoneer, Inc. has an Earnings ESP of +7.14% and a Zacks Rank #2.

Arrow Electronics, Inc. (ARW - Free Report) has an Earnings ESP of +0.60% and a Zacks Rank of 3.

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