Texas Instruments (NASDAQ:TXN)
Information Technology - Semiconductors | Reports April 27, After Market Closes
Key Takeaways
- The Estimize consensus for TXN is calling for earnings per share of $0.63 on $2.99 billion in revenue, 1 cent higher than Wall Street on the bottom line and $8 million on the top
- Texas Instruments is the market leader in analog semiconductors best known for its TI calculators used in schools around the world
- Texas Instruments’ frequent efforts to remain competitive have left its balance sheet highly leveraged
Lately the semiconductor industry has been a case of the haves and have-nots, with some names performing incredibly well, while others completely miss the mark. Texas Instruments, the market leader in analog semiconductors, is coming off a mixed fiscal 2015, where it missed in three quarters but also massively beat in one. The company’s portfolio features calculators that most of us are far too familiar with from high school math classes. TXN also produces semiconductors in amplifiers, clocks, and power management tools, just to name a few. Their impressive product line and market share unfortunately are not expected to boost earnings this quarter, which look rather meager.
The Estimize consensus is calling for earnings per share of $0.63 on $2.99 billion in revenue, 1 cent higher than Wall Street on the bottom line and $8 million on the top. Compared to a year earlier, profits are forecasted to rise 4% while sales could fall as much as 5%. Despite volatile earnings, the stock is a perennial mover during earnings season.
In the days following earnings, shares, on average, increase 1% and get as high as 2% 30 day post earnings. If past trends are indicative of the future, this would be a nice gain for a stock that is up 8.46% in the past 12 months.
Texas Instruments is best known for its analog products but it also receives significant contributions from its embedded processing segment. Between the two divisions, this accounted for nearly 85% of the company’s revenue in 2015. Demand appears to be picking up with both analog and embedded processing products which should give a nice boost to the company’s bottom line. Meanwhile, Texas Instruments continues to invest in restructuring initiatives that will expose them to high growth areas. They include the Internet of Things, automotive markets, and expanding its geographical footprint.
On the downside, Texas Instruments operates in a more conservative space where demand has been waning in the past few years. Last quarter the company reported a 2% decline in revenue with reports that the first quarter should be just as bad. Furthermore, they must compete in a heavily concentrated industry with tech giants like Broadcom (NASDAQ:BRCM) and Intel (NASDAQ:INTC). Many of Texas Instrument’s recent efforts to do so have left the balance sheet in shambles. The company’s finances remain highly leveraged with net debt around $1.08 billion.
