Why has Texas Instruments (TXN) increased 3.6% since the last revenue report?
IIt’s been about a month since the last Texas Instruments (TXN) earnings report. Stocks rose about 3.6% during that time, outperforming the S&P 500.
Will the recent positive trend continue until its next earnings release, or should Texas Instruments retreat? Before we dive into how investors and analysts have reacted in recent times, let’s take a look at the latest earnings report to get a better grasp of the important factors.
Texas Instruments beats on first quarter results
Texas Instruments reported first quarter 2021 earnings of $ 1.87 per share, which topped Zacks’ consensus estimate by 19.9%. Net income also exceeded management’s expectations of $ 1.44 to $ 1.66 per share.
In addition, the figure increased 51% year over year and 3.9% sequentially.
The company reported revenue of $ 4.3 billion, which exceeded Zacks’ consensus estimate of $ 3.9 billion. Revenue also significantly exceeded management’s forecast of $ 3.79 billion to $ 4.11 billion.
In addition, sales improved by 29% compared to the quarter of last year and by 5.2% compared to the previous quarter.
Sales growth was driven by improved end market conditions. Strong demand in the personal electronics and industrial market, as well as the strong recovery in the automotive market remained the main favorable winds. In addition, the strong performance of the Analog and Embedded Processing segments contributed well.
However, weakness in the enterprise systems market was an overhang during the quarter under review.
Nonetheless, the company’s effective manufacturing strategies and continued returns to shareholders remain favorable winds.
In addition, the upward trend in personal electronics, due to the growing demand for electronic gadgets for remote working and entertainment amid the pandemic, is expected to benefit the business in the days to come.
In addition, its significant investments in new growth avenues and its competitive advantages are the positive points.
Final market in detail
The continued rebound in the automotive sector has led to the company’s revenue growth of 25% in this end market on a year-over-year basis.
In addition, industrial market revenues increased 30% from last year quarter, driven by strong momentum in most sectors.
In addition, the company’s strong traction in key industries led to the company’s 50% year-over-year revenue growth in the personal electronics market in the current quarter.
Meanwhile, the communications equipment market revenue remained stable year over year.
Additionally, enterprise systems revenue declined 10% year over year.
Segments in detail
Analog: The company generated segment $ 3.3 billion (76.5% of total revenue), which was up 33% from the quarter last year.
Integrated Processing: The industry generated $ 767 million in revenue (17.9% of total revenue), up 17% year over year.
Other: Sector revenues were $ 242 million (5.6% of total revenues). The figure was up 12% from the previous year’s quarter.
Texas Instruments gross margin of 65.2% increased 250 basis points (bps) compared to the last year quarter.
As a percentage of revenue, selling, general and administrative expenses decreased 260 basis points year over year to $ 425 million in the current quarter.
In addition, research and development spending of $ 386 million was down 240 basis points from the last year quarter as a percentage of revenue.
The operating margin was 45.2%, an increase of 780 basis points from the previous year quarter.
Balance sheet and cash flow
As at March 31, 2021, the cash and short-term investment balance was $ 6.7 billion, compared to $ 6.6 billion as at December 31, 2020.
At the end of the current quarter, the company had long-term debt of $ 6.25 billion, up from $ 6.24 billion in the previous quarter.
Current debt was nil, compared to $ 550 million in the previous quarter.
The company generated $ 1.9 billion in cash from operations, up from $ 2.1 billion in the prior quarter.
The capex was $ 308 million in the first quarter. In addition, free cash flow was $ 1.5 billion.
In addition, Texas Instruments paid dividends valued at $ 940 million during the current quarter. In addition, the company repurchased shares worth $ 100 million.
For the second quarter of 2021, Texas Instruments is forecasting revenues of between $ 4.13 billion and $ 4.47 billion. Additionally, earnings are expected to be $ 1.68 to $ 1.92 per share.
How have the estimates evolved since?
Over the past month, investors have witnessed an upward trend in the new estimates. The consensus estimate has changed by 7.52% due to these changes.
At present, Texas Instruments has an average Growth score of C, a rating with the same score on the momentum front. However, the stock was given a rating of F on the value side, which places it in the lowest quintile for this investment strategy.
Overall, the stock has an overall VGM score of D. If you’re not strategy-focused, this score is the one you should be interested in.
Estimates have been trending higher for the stock, and the magnitude of these revisions looks promising. It is hardly surprising that Texas Instruments has a Zacks Rank # 2 (Buy). We expect an above-average return for the stock over the next few months.
Click to get this free report
Texas Instruments Incorporated (TXN): Free Stock Analysis Report
To read this article on Zacks.com, click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.