As Texas Instruments (TXN, Financial) prepares to announce its upcoming earnings, options trading has surged to 1.8 times the average volume. The activity is largely skewed towards call options, which currently outnumber put options by a ratio of 7:6.
Market sentiment, as indicated by the current implied volatility, suggests that investors are bracing for a significant move in the stock price. Analysts predict a potential change of approximately 4.8%, equating to a $7.44 fluctuation following the earnings release.
Historically, the company's stock has shown an average movement of 3.8% in response to earnings over the past eight quarters. The heightened trading activity and predicted volatility indicate a keen investor interest in how TXN will perform this quarter.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 27 analysts, the average target price for Texas Instruments Inc (TXN, Financial) is $190.23 with a high estimate of $284.00 and a low estimate of $125.00. The average target implies an upside of 23.63% from the current price of $153.88. More detailed estimate data can be found on the Texas Instruments Inc (TXN) Forecast page.
Based on the consensus recommendation from 36 brokerage firms, Texas Instruments Inc's (TXN, Financial) average brokerage recommendation is currently 2.8, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Texas Instruments Inc (TXN, Financial) in one year is $162.04, suggesting a upside of 5.31% from the current price of $153.875. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Texas Instruments Inc (TXN) Summary page.
Key Business Developments
Release Date: January 23, 2025
- Revenue: $4 billion, a decrease of 3% sequentially and 2% year-over-year.
- Analog Revenue: Grew 2% year-over-year.
- Embedded Processing: Declined 18% year-over-year.
- Gross Profit: $2.3 billion, or 58% of revenue.
- Gross Profit Margin: Decreased 190 basis points sequentially.
- Operating Expenses: $937 million, up 4% year-over-year.
- Operating Profit: $1.4 billion, or 34% of revenue.
- Net Income: $1.2 billion, or $1.30 per share.
- Cash Flow from Operations: $2 billion in the quarter.
- Capital Expenditures: $1.2 billion in the quarter.
- Dividends Paid: $1.2 billion in the quarter.
- Stock Repurchases: $537 million in the quarter.
- Dividend Increase: 5% in the fourth quarter.
- Cash and Short-term Investments: $7.6 billion at the end of the quarter.
- Total Debt Outstanding: $13.7 billion.
- Inventory: $4.5 billion, up $231 million from the prior quarter.
- Free Cash Flow for 2024: $1.5 billion, or 10% of revenue.
- First Quarter 2025 Revenue Guidance: $3.74 billion to $4.06 billion.
- First Quarter 2025 EPS Guidance: $0.94 to $1.16.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Texas Instruments Inc (TXN, Financial) reported a 2% year-over-year growth in Analog revenue after eight quarters of decline.
- The company increased its dividend per share by 5% in the fourth quarter, marking the 21st consecutive year of dividend increases.
- Texas Instruments Inc (TXN) has a strong balance sheet with $7.6 billion in cash and short-term investments.
- The company is strategically emphasizing growth in the industrial and automotive markets, which now make up about 70% of its revenue.
- Texas Instruments Inc (TXN) received a $1.6 billion CHIPS Act grant, which will support its new 300-millimeter wafer fabs, enhancing its manufacturing capabilities.
Negative Points
- Fourth-quarter revenue decreased by 3% sequentially and 2% year-over-year, with Embedded Processing declining by 18%.
- Gross profit margin decreased by 190 basis points due to lower revenue, higher depreciation, and reduced factory loadings.
- Operating profit was down 10% from the same quarter a year ago.
- The company is experiencing a seasonal decline in Q1 revenue, expected to be down 2% to 3% sequentially.
- Embedded business margins are under pressure due to underutilization of the Lehi factory, impacting profitability.
