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Texas Instruments (TXN) Up 5.1% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Texas Instruments (TXN - Free Report) . Shares have added about 5.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Texas Instruments due for a pullback? 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 drivers.
Texas Instruments Q2 Earnings Beat, Revenues Down Y/Y
Texas Instruments reported second-quarter 2024 earnings of $1.22 per share, surpassing the Zacks Consensus Estimate by 5.2%. The figure exceeded the guided range of $1.05-$1.16 per share.
The figure declined 35% year over year but gained 1.7% sequentially.
TXN reported revenues of $3.82 billion, which beat the Zacks Consensus Estimate by 0.6%. The figure came within management’s guidance of $3.65-$3.95 billion.
Revenues decreased 16% from the year-ago quarter’s level but increased 4% sequentially.
The year-over-year decline was attributed to sluggishness in its Analog, Embedded Processing and Other segments.
On a sequential basis, Texas Instruments benefited from personal electronics, communication equipment and enterprise systems markets.
Sequentially, growth of mid-teens in the personal electronics market was a positive.
A sequential mid-single-digit increase in the communications equipment market was a positive. A 20% sequential growth in the enterprise systems market was a plus.
However, automotive and industrial markets declined by mid-single digits and low-single-digit sequentially, respectively.
Nevertheless, TXN’s 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 $2.93 billion were generated from the segment (76.6% of total revenues), down 11% from the year-ago quarter’s level. The figure came above the Zacks Consensus Estimate of $2.90 billion.
Embedded Processing: Revenues amounted to $615 million (16.1% of total revenues), down 31% year over year. The figure lagged the Zacks Consensus Estimate of $677.57 million.
Other: Revenues totaled $279 million (7.3% of total revenues), down 22% from the prior-year quarter’s level. The figure beat the consensus mark of $205.21 million.
Operating Details
Texas Instruments’ gross margin of 58% contracted 640 basis points (bps) from the year-ago quarter’s level.
As a percentage of revenues, selling, general and administrative expenses expanded 200 bps year over year to $465 million in the reported quarter.
Research and development expenses of $498 million expanded 250 bps from the year-ago quarter’s level as a percentage of revenues.
The operating margin was 32.7%, which contracted 1080 bps from the prior-year quarter’s number.
Balance Sheet & Cash Flow
As of Jun 30, 2024, the cash and short-term investment balance was $9.7 billion compared with $10.4 billion as of Mar 31, 2024.
At the end of the reported quarter, TXN had a long-term debt of $12.842 billion compared with $12.840 billion in the prior quarter.
The current debt was $1.05 billion, down from $1.35 billion at the end of the first quarter of 2024.
Texas Instruments generated $1.57 billion of cash from operations, up from $1.02 billion in the previous quarter.
Capex was $1.06 billion in the reported quarter, and the company reported a free cash flow of $507 million.
Texas Instruments paid out dividends worth $1.185 billion in the reported quarter. It repurchased shares worth $71 million.
Guidance
For third-quarter 2024, TXN expects revenues between $3.94 billion and $4.26 billion.
The company expects earnings within $1.24-$1.48 per share.
The company expects the effective tax rate to be approximately 13%
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
At this time, Texas Instruments has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. However, 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 upward for the stock, and the magnitude of these revisions looks promising. 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) Up 5.1% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Texas Instruments (TXN - Free Report) . Shares have added about 5.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Texas Instruments due for a pullback? 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 drivers.
Texas Instruments Q2 Earnings Beat, Revenues Down Y/Y
Texas Instruments reported second-quarter 2024 earnings of $1.22 per share, surpassing the Zacks Consensus Estimate by 5.2%. The figure exceeded the guided range of $1.05-$1.16 per share.
The figure declined 35% year over year but gained 1.7% sequentially.
TXN reported revenues of $3.82 billion, which beat the Zacks Consensus Estimate by 0.6%. The figure came within management’s guidance of $3.65-$3.95 billion.
Revenues decreased 16% from the year-ago quarter’s level but increased 4% sequentially.
The year-over-year decline was attributed to sluggishness in its Analog, Embedded Processing and Other segments.
On a sequential basis, Texas Instruments benefited from personal electronics, communication equipment and enterprise systems markets.
Sequentially, growth of mid-teens in the personal electronics market was a positive.
A sequential mid-single-digit increase in the communications equipment market was a positive. A 20% sequential growth in the enterprise systems market was a plus.
However, automotive and industrial markets declined by mid-single digits and low-single-digit sequentially, respectively.
Nevertheless, TXN’s 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 $2.93 billion were generated from the segment (76.6% of total revenues), down 11% from the year-ago quarter’s level. The figure came above the Zacks Consensus Estimate of $2.90 billion.
Embedded Processing: Revenues amounted to $615 million (16.1% of total revenues), down 31% year over year. The figure lagged the Zacks Consensus Estimate of $677.57 million.
Other: Revenues totaled $279 million (7.3% of total revenues), down 22% from the prior-year quarter’s level. The figure beat the consensus mark of $205.21 million.
Operating Details
Texas Instruments’ gross margin of 58% contracted 640 basis points (bps) from the year-ago quarter’s level.
As a percentage of revenues, selling, general and administrative expenses expanded 200 bps year over year to $465 million in the reported quarter.
Research and development expenses of $498 million expanded 250 bps from the year-ago quarter’s level as a percentage of revenues.
The operating margin was 32.7%, which contracted 1080 bps from the prior-year quarter’s number.
Balance Sheet & Cash Flow
As of Jun 30, 2024, the cash and short-term investment balance was $9.7 billion compared with $10.4 billion as of Mar 31, 2024.
At the end of the reported quarter, TXN had a long-term debt of $12.842 billion compared with $12.840 billion in the prior quarter.
The current debt was $1.05 billion, down from $1.35 billion at the end of the first quarter of 2024.
Texas Instruments generated $1.57 billion of cash from operations, up from $1.02 billion in the previous quarter.
Capex was $1.06 billion in the reported quarter, and the company reported a free cash flow of $507 million.
Texas Instruments paid out dividends worth $1.185 billion in the reported quarter. It repurchased shares worth $71 million.
Guidance
For third-quarter 2024, TXN expects revenues between $3.94 billion and $4.26 billion.
The company expects earnings within $1.24-$1.48 per share.
The company expects the effective tax rate to be approximately 13%
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
At this time, Texas Instruments has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. However, 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 upward for the stock, and the magnitude of these revisions looks promising. Notably, Texas Instruments has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.