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Texas Instruments (TXN) Q3 Earnings & Revenues Miss, Down Y/Y
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Texas Instruments (TXN - Free Report) reported third-quarter 2023 earnings of $1.85 per share. The figure was near the higher end of management’s guided range of $1.68-$1.92.
However, the figure declined 25% year over year and 1.1% sequentially.
The bottom line includes a benefit of 5 cents, excluding which the figure is at $1.80, missing the Zacks Consensus Estimate by 0.5%.
TXN reported revenues of $4.53 billion, which lagged the Zacks Consensus Estimate of $4.57 billion. The figure came within the management’s guidance of $4.36-$4.74 billion.
Revenues decreased 14% from the year-ago quarter’s level while slightly improving by 0.02% sequentially.
The year-over-year decline was attributed to weakness across various end markets. 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 industrial and communication equipment markets.
Nevertheless, it experienced sequential growth in the automotive end market, which remains a positive. TXN also experienced an improvement in the personal electronics and enterprise systems markets from the prior quarter.
We note that Texas Instruments’ efficient manufacturing strategies and consistent returns to shareholders are likely to instill investors’ optimism in the stock. Its substantial investments in growth avenues and competitive advantages are other positives.
Shares of Texas Instruments have lost 9.1% in the year-to-date period against the industry’s growth of 109.7%.
Texas Instruments Incorporated Price, Consensus and EPS Surprise
Analog: Revenues of $3.35 billion were generated from the segment (74% of total revenues), down 16% from the year-ago quarter’s level. The figure came above the Zacks Consensus Estimate of $3.303 billion.
Embedded Processing: Revenues amounted to $890 million (19.6% of total revenues), up 8% year over year. The figure beat the Zacks Consensus Estimate of $887 million.
Other: Revenues totaled $289 million (6.4% of total revenues). The figure was down 32% from the prior-year quarter’s level. The reported revenue missed the consensus mark of $362 million.
Operating Details
Texas Instruments’ gross margin of 62.1% contracted 690 basis points (bps) from the year-ago quarter’s level.
As a percentage of revenues, selling, general and administrative expenses expanded 170 bps year over year to $452 million in the reported quarter.
Research and development expenses of $471 million expanded 220 bps from the year-ago quarter’s level as a percentage of revenues.
The operating margin was 41.7%, which contracted 940 bps from the prior-year quarter’s number.
Balance Sheet & Cash Flow
As of Sep 30, 2023, the cash and short-term investment balance was $8.95 billion compared with $9.55 billion as of Jun 30, 2023.
At the end of the reported quarter, TXN had a long-term debt of $10.922 billion compared with $10.920 billion in the prior quarter.
Current debt was $300 million, down from $299 million at the end of second-quarter 2023.
Texas Instruments generated $1.94 billion of cash from operations, up from $1.39 billion in the previous quarter.
Capex was $1.49 billion in the reported quarter and free cash flow was $442 million.
Texas Instruments paid out dividends worth $1.13 billion in the reported quarter. It repurchased shares worth 46 million.
Guidance
For fourth-quarter 2023, Texas Instruments expects revenues between $3.93 billion and $4.27 billion. The midpoint of this range is below the Zacks Consensus Estimate of $4.54 billion.
The company expects earnings within $1.35-$1.57 per share. The midpoint of this range is below the Zacks Consensus Estimate of $1.80 per share.
Zacks Rank and Stocks to Consider
Currently, Texas Instruments carries a Zacks Rank #4 (Sell).
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Texas Instruments (TXN) Q3 Earnings & Revenues Miss, Down Y/Y
Texas Instruments (TXN - Free Report) reported third-quarter 2023 earnings of $1.85 per share. The figure was near the higher end of management’s guided range of $1.68-$1.92.
However, the figure declined 25% year over year and 1.1% sequentially.
The bottom line includes a benefit of 5 cents, excluding which the figure is at $1.80, missing the Zacks Consensus Estimate by 0.5%.
TXN reported revenues of $4.53 billion, which lagged the Zacks Consensus Estimate of $4.57 billion. The figure came within the management’s guidance of $4.36-$4.74 billion.
Revenues decreased 14% from the year-ago quarter’s level while slightly improving by 0.02% sequentially.
The year-over-year decline was attributed to weakness across various end markets. 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 industrial and communication equipment markets.
Nevertheless, it experienced sequential growth in the automotive end market, which remains a positive. TXN also experienced an improvement in the personal electronics and enterprise systems markets from the prior quarter.
We note that Texas Instruments’ efficient manufacturing strategies and consistent returns to shareholders are likely to instill investors’ optimism in the stock. Its substantial investments in growth avenues and competitive advantages are other positives.
Shares of Texas Instruments have lost 9.1% in the year-to-date period against the industry’s growth of 109.7%.
Texas Instruments Incorporated Price, Consensus and EPS Surprise
Texas Instruments Incorporated price-consensus-eps-surprise-chart | Texas Instruments Incorporated Quote
Segments in Detail
Analog: Revenues of $3.35 billion were generated from the segment (74% of total revenues), down 16% from the year-ago quarter’s level. The figure came above the Zacks Consensus Estimate of $3.303 billion.
Embedded Processing: Revenues amounted to $890 million (19.6% of total revenues), up 8% year over year. The figure beat the Zacks Consensus Estimate of $887 million.
Other: Revenues totaled $289 million (6.4% of total revenues). The figure was down 32% from the prior-year quarter’s level. The reported revenue missed the consensus mark of $362 million.
Operating Details
Texas Instruments’ gross margin of 62.1% contracted 690 basis points (bps) from the year-ago quarter’s level.
As a percentage of revenues, selling, general and administrative expenses expanded 170 bps year over year to $452 million in the reported quarter.
Research and development expenses of $471 million expanded 220 bps from the year-ago quarter’s level as a percentage of revenues.
The operating margin was 41.7%, which contracted 940 bps from the prior-year quarter’s number.
Balance Sheet & Cash Flow
As of Sep 30, 2023, the cash and short-term investment balance was $8.95 billion compared with $9.55 billion as of Jun 30, 2023.
At the end of the reported quarter, TXN had a long-term debt of $10.922 billion compared with $10.920 billion in the prior quarter.
Current debt was $300 million, down from $299 million at the end of second-quarter 2023.
Texas Instruments generated $1.94 billion of cash from operations, up from $1.39 billion in the previous quarter.
Capex was $1.49 billion in the reported quarter and free cash flow was $442 million.
Texas Instruments paid out dividends worth $1.13 billion in the reported quarter. It repurchased shares worth 46 million.
Guidance
For fourth-quarter 2023, Texas Instruments expects revenues between $3.93 billion and $4.27 billion. The midpoint of this range is below the Zacks Consensus Estimate of $4.54 billion.
The company expects earnings within $1.35-$1.57 per share. The midpoint of this range is below the Zacks Consensus Estimate of $1.80 per share.
Zacks Rank and Stocks to Consider
Currently, Texas Instruments carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader technology sector are Dell Technologies (DELL - Free Report) , Applied Materials (AMAT - Free Report) and Arista Networks (ANET - Free Report) . While Dell Technologies sports a Zacks Rank #1 (Strong Buy), Applied Materials and Arista Networks, each carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Dell Technologies shares have surged 68.8% in the year-to-date period. DELL’s long-term earnings growth rate is currently projected at 12%.
Shares of Applied Materials have gained 58.1% in the year-to-date period. AMAT’s long-term earnings growth rate is currently anticipated at 6.10%.
Arista Networks shares have climbed 44.2% in the year-to-date period. ANET’s long-term earnings growth rate is currently pegged at 18.75%.