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Texas Instruments (TXN) Down 3% 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% 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 Q4 Earnings
Texas Instruments reported fourth-quarter 2022 earnings of $2.13 per share, beating the Zacks Consensus Estimate by 8.7%. Also, the figure exceeded the management’s guided range of $1.83-$2.11.
However, the bottom line declined 6% year over year and 13.8% from the previous quarter’s level.
TXN reported revenues of $4.67 billion, which surpassed the Zacks Consensus Estimate of $4.59 billion. Further, the figure was within the management’s guided range of $4.4-$4.8 billion.
However, it decreased 3% from the year-ago quarter’s level and 11% sequentially. This was attributed to a weak demand environment. The company witnessed sluggishness in its Analog and Other segments.
On a sequential basis, Texas Instruments suffered from widespread weakness in the industrial, personal electronics, communication equipment and enterprise systems markets.
Nevertheless, it experienced sequential growth in the automotive end market which remains a positive.
Also, Embedded Processing segment delivered strong performance on a year-over year basis, which was another positive.
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 $3.6 billion were generated from the segment (76.2% of total revenues), down 5% from the year-ago quarter’s level.
Embedded Processing: Revenues summed $837 million (17.9% of total revenues), up 10% year over year.
Other: Revenues totaled $275 million (5.9% of total revenues). The figure was down 11% from the prior-year quarter’s level.
Operating Details
Texas Instruments’ gross margin of 66.1% contracted 320 basis points (bps) from the year-ago quarter’s level.
As a percentage of revenues, selling, general and administrative expenses expanded 80 bps year over year to $429 million in the reported quarter.
Research and development expenses of $434 million expanded 120 bps from the year-ago quarter’s level as a percentage of revenues.
The operating margin was 46.6%, which contracted 520 bps from the prior-year quarter’s number.
Balance Sheet & Cash Flow
As of Dec 31, 2022, the cash and short-term investment balance was $9.07 billion compared with $9.09 billion as of Sep 30, 2022.
At the end of the reported quarter, TXN had a long-term debt of $8.2 billion compared with $7.4 billion in the prior quarter.
Current debt was $500 million at the end of fourth-quarter 2022 compared with $499 million at the end of third-quarter 2022.
Texas Instruments generated $2.04 billion of cash from operations, down from $2.8 billion in the previous quarter.
Capex was $967 million in the reported quarter. Free cash flow stood at $1.08 billion.
Texas Instruments paid out dividends worth $1.12 billion in the reported quarter. TXN repurchased shares worth $848 million.
Guidance
For first-quarter 2023, Texas Instruments expects revenues between $4.17 billion and $4.53 billion.
Texas Instruments expects earnings within $1.64-$1.90 per share.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
At this time, Texas Instruments has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. 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% 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% 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 Q4 Earnings
Texas Instruments reported fourth-quarter 2022 earnings of $2.13 per share, beating the Zacks Consensus Estimate by 8.7%. Also, the figure exceeded the management’s guided range of $1.83-$2.11.
However, the bottom line declined 6% year over year and 13.8% from the previous quarter’s level.
TXN reported revenues of $4.67 billion, which surpassed the Zacks Consensus Estimate of $4.59 billion. Further, the figure was within the management’s guided range of $4.4-$4.8 billion.
However, it decreased 3% from the year-ago quarter’s level and 11% sequentially. This was attributed to a weak demand environment. The company witnessed sluggishness in its Analog and Other segments.
On a sequential basis, Texas Instruments suffered from widespread weakness in the industrial, personal electronics, communication equipment and enterprise systems markets.
Nevertheless, it experienced sequential growth in the automotive end market which remains a positive.
Also, Embedded Processing segment delivered strong performance on a year-over year basis, which was another positive.
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 $3.6 billion were generated from the segment (76.2% of total revenues), down 5% from the year-ago quarter’s level.
Embedded Processing: Revenues summed $837 million (17.9% of total revenues), up 10% year over year.
Other: Revenues totaled $275 million (5.9% of total revenues). The figure was down 11% from the prior-year quarter’s level.
Operating Details
Texas Instruments’ gross margin of 66.1% contracted 320 basis points (bps) from the year-ago quarter’s level.
As a percentage of revenues, selling, general and administrative expenses expanded 80 bps year over year to $429 million in the reported quarter.
Research and development expenses of $434 million expanded 120 bps from the year-ago quarter’s level as a percentage of revenues.
The operating margin was 46.6%, which contracted 520 bps from the prior-year quarter’s number.
Balance Sheet & Cash Flow
As of Dec 31, 2022, the cash and short-term investment balance was $9.07 billion compared with $9.09 billion as of Sep 30, 2022.
At the end of the reported quarter, TXN had a long-term debt of $8.2 billion compared with $7.4 billion in the prior quarter.
Current debt was $500 million at the end of fourth-quarter 2022 compared with $499 million at the end of third-quarter 2022.
Texas Instruments generated $2.04 billion of cash from operations, down from $2.8 billion in the previous quarter.
Capex was $967 million in the reported quarter. Free cash flow stood at $1.08 billion.
Texas Instruments paid out dividends worth $1.12 billion in the reported quarter. TXN repurchased shares worth $848 million.
Guidance
For first-quarter 2023, Texas Instruments expects revenues between $4.17 billion and $4.53 billion.
Texas Instruments expects earnings within $1.64-$1.90 per share.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
At this time, Texas Instruments has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. 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.