Texas Instruments Q4 Earnings: Can TXN Hit Its $1.05 EPS Target?

in EARNINGS/INVESTING IDEAS by

Texas Instruments Incorporated (NASDAQGS:TXN) is scheduled to report Q4 earnings results on January 22, 2020. The conference call is scheduled for 3:30 p.m. Central time.

The company is expected to report earnings of $1.05/share on revenue of $3.2 billion. The consensus earnings per share (EPS) of $1.05/share is based on a poll of 7 analysts and represents a decline of -21.0% over the same quarter last year when the company reported earnings of $1.33/share.

The revenue forecast of $3.2 billion based on a poll of 23 analysts implies a year-over-year (YoY) decline of -13.9%. Last year the company reported $3.717 billion in revenue for the quarter.

Expected to report EPS decline of -$0.28/share for Q4, 2019
Metric Expected Prior Year YoY Change
Revenue $3,200.21 $3,717.00 -13.9%
EPS $1.05 $1.33 -21.0%

Texas Instruments has historically boasted a robust salesforce that has allowed the company to cross-sell across the company’s semiconductor product portfolio drive revenue growth. The company is a market leader in multiple chip segments including digital signal processors and analog semiconductors.


NASDAQGS:TXN Fundamentals Chart
Source: Finbox

Earnings Call Trends

Historically, management has exceeded analyst expectations 7 out of the last 8 tracked quarters, and missed expectations 1 quarter.

What are your expectations from Texas Instruments for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q3, 2019 $1.42 $1.48 3.9% Beat
Q2, 2019 $1.27 $1.33 4.7% Beat
Q1, 2019 $1.18 $1.29 9.4% Beat
Q4, 2018 $1.29 $1.33 2.9% Beat
Q3, 2018 $1.58 $1.65 4.7% Beat
Q2, 2018 $1.34 $1.45 8.0% Beat
Q1, 2018 $1.14 $1.29 13.2% Beat
Q4, 2017 $1.12 $1.11 -1.1% Missed

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending September 30, 2019, the stock price reacted by falling by -9.1%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
2019-10-22 $130.93 $118.95 -9.1% Decline
2019-07-23 $118.18 $129 9.2% Increase
2019-04-23 $114.95 $118.43 3.0% Increase
2019-01-23 $96.62 $102.09 5.7% Increase

Fundamentals And Technical Analysis

Texas Instruments is currently trading at $131.70/share, up 1.2% for the day. The company is trading at approximately 99.6% of its 52-week high of $132.20/share. The company’s stock price is up 10.7% since the last earnings report and up 1.3% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 67.55 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.

NASDAQGS:TXN Stock Price Chart Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 23.7x and a forward P/E multiple of 24.6x.

Texas Instruments’s current share price also implies a price-to-book (P/B) multiple of 13.7x. The following table summarizes some other key fundamental ratios:

Data as of January 20, 2020
Metric Value
Last Fiscal Period FY2019.Q3
Period End Date September 30, 2019
Stock Price (Current) $131.70
P/E Ratio 23.7x
P/E Ratio (Fwd) 24.6x
PEG Ratio -9.8
Total Debt to Capital (%) 4.8%
Levered Free Cash Flow $6.033 billion
Enterprise Value / EBITDA 17.9x

Source: Finbox

Company Profile: Texas Instruments Incorporated

Texas Instruments Incorporated is a large-cap stock with a market capitalization of $123.1 billion and a total enterprise value of $124.2 billion. The company operates in the Information Technology sector and the Semiconductors & Semiconductor Equipment industry.

Texas Instruments Incorporated designs, manufactures and sells semiconductors to electronics designers and manufacturers worldwide. It operates in two segments, Analog and Embedded Processing.

The Analog segment offers power products to manage power requirements in various levels using battery management solutions, portable components, power supply controls, point-of-load products, switches and interfaces, integrated protection devices, high-voltage products, and mobile lighting and display products. This segment also provides signal chain products that sense, condition, and measure signals to allow information to be transferred or converted for further processing and control for use in amplifier, data converter, interface product, motor drive, clock, and sensing product end-markets; and integrated analog and standard products, which are primarily for sale into personal electronics, industrial, and automotive markets.

The Embedded Processing segment offers connected microcontrollers, such as microcontrollers, microcontrollers with integrated wireless capabilities, and stand-alone wireless connectivity solutions that are used in electronic equipment to sense, connect, log, and transfer data; digital signal processors for mathematical computations; and applications processors for specific computing activity. This segment offers products for use in various markets, principally industrial and automotive. The company also provides DLP products, primarily for use in projectors to create high-definition images; calculators; and application-specific integrated circuits.

Texas Instruments Incorporated markets and sells its semiconductor products through direct sales and distributors, as well as online. The company was founded in 1930 and is headquartered in Dallas, Texas.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

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