What's In Store For Texas Instruments (TXN) In Q1 Earnings?

Texas Instruments (NASDAQ:TXN) or TI is scheduled to report first-quarter 2018 earnings on Apr 24.

The company beat the Zacks Consensus Estimate in three of the trailing four quarters, with an average positive surprise of 7.04%. In fourth-quarter 2017, earnings of $1.09 per share were in line with the Zacks Consensus Estimate.

Revenues of $3.75 billion surpassed the consensus mark and increased 9.8% year over year. The figure also came ahead of the guided range of $3.57-$3.87 billion, driven by strong demand in the auto and industrial markets.

For the first-quarter, TI expects revenues between $3.49 billion and $3.79 billion (down 3% sequentially at the mid-point). The Zacks Consensus Estimate for revenues currently stands at $3.65 billion.

Earnings are expected between $1.01 and $1.17 per share. The Zacks Consensus Estimate for earnings is currently pegged at $1.11.

TI shares have returned 0.9% compared with the industry’s year-to-date rally of 13.9%.

Key Factors

TI is anticipated to benefit from strength in several high-margin & high-growth areas of the analog and embedded processing markets.

The company’s increasing exposure to the industrial and automotive markets is positive. However, weakness in communications equipment and personal electronics markets are likely to negatively impact top-line growth.

TI’s analog business has been witnessing growth for the last four quarters driven by robust performance in almost all the product lines.

We expect this trend to continue in the to-be-reported quarter, given TI’s compelling product line and manufacturing efficiencies that include growing 300-millimeter analog output.

Notably, the company enjoys cost advantage on every wafer that it builds using the 300-millimeter technology against 200-millimeter technology. This competitive advantage is expected to drive growth in the to-be-reported quarter.

The Zacks Consensus Estimate for Analog segment revenues is currently pegged at $2.44 billion.

Embedded Processing has also benefited from growth across all product lines. The Zacks Consensus Estimate for this segment is currently pegged at $893 million.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) along with a positive Earnings ESP has a good chance of beating estimates. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.

TI has a Zacks Rank #2 and an Earnings ESP of -1.39%, which indicates an unlikely positive surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are few stocks you may consider as our proven model shows that they have the right combination of elements to post an earnings beat this quarter.

Western Digital (NASDAQ:WDC) has an Earnings ESP of +2.20% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Paycom Software (NYSE:PAYC) has an Earnings ESP of +0.33% and a Zacks Rank #1.

GrubHub (NYSE:GRUB) has an Earnings ESP of +2.78% and a Zacks Rank #2.

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