To The Moon

$Texas Instruments(TXN)$ will be reporting its quarterly result on 23 Jan 2025 after market close for the period ending 31 December 2024, and it is expected to show a fall in quarterly revenue.

It is expected to report a 5.0% decrease in revenue to $3.874 billion from $4.08 billion a year ago, according to the mean estimate from 27 analysts, based on LSEG data.

The consensus estimate for the earnings per share is expected to come in at 1.21 which is lower than the 1.49 in the same period last year.

Texas Instruments (TXN) Last Earnings Neutral Sentiment

TXN has gained 1.31% since its last earnings reported on 22 Oct 2024, the earnings call sentiment is neutral as it presented a mixed picture with sequential revenue growth and strong automotive and personal electronics performance, particularly in China. However, year-over-year declines in revenue and significant challenges in the industrial market were noted, alongside a decrease in operating profit and increased inventory levels.

Texas Instruments (TXN) Guidance Conservative

In the Texas Instruments third quarter 2024 earnings call, the company provided guidance for the fourth quarter, expecting revenue to range between $3.7 billion and $4 billion, with earnings per share forecasted between $1.07 and $1.29. The effective tax rate is anticipated to remain at approximately 13%. For the third quarter, TI reported revenue of $4.2 billion, a 9% sequential increase, but an 8% year-over-year decrease.

Gross profit was $2.5 billion, representing 60% of revenue, while operating expenses amounted to $920 million. The company's net income stood at $1.4 billion, or $1.47 per share. TI also noted their capital management efforts, including cash generation of $1.7 billion from operations and capital expenditures of $1.3 billion. The company returned $5.2 billion to shareholders over the past 12 months, highlighting a strong balance sheet with $8.8 billion in cash and short-term investments.

Texas Instruments (TXN) Strong Automotive Market Performance To Continue

TXN have seen sequential revenue growth in the third quarter which came in at $4.2 billion, an increase of 9% sequentially. But for this upcoming reporting quarter, TXN is expected to report a decrease in revenue.

Automotive market increased upper single digits, primarily due to strength in China, with 20% growth in both Q2 and Q3. There will be more demand for TXN as the automotive market expanded in Q4.

Personal electronics grew about 30% sequentially, showing signs of cyclical recovery. This should continue in Q4 as more demand for personal electronics due to the holiday gifting season.

TXN announced a 5% increase in its dividend, marking the 21st consecutive year of dividend increases.

Texas Instruments (TXN) Headwinds And Revenue Decline A Concern

We have seen TXN revenue decreased by 8% year-over-year. Analog revenue declined 4% and Embedded Processing declined 27% year-over-year.

The industrial market was down low single digits with continued inventory reduction by customers. Operating profit was $1.6 billion, down 18% year-over-year, with gross profit margin decreasing.

Inventory at the end of the quarter was $4.3 billion, up $190 million from the prior quarter.

These headwinds might continue into 2025 as there will be some challenges facing the global and chinese economy.

Texas Instruments (TXN) Price Target

Based on 22 Wall Street analysts offering 12 month price targets for Texas Instruments in the last 3 months. The average price target is $211.89 with a high forecast of $298.00 and a low forecast of $140.00. The average price target represents a 8.53% change from the last price of $195.23.

Technical Analysis - Exponential Moving Average

If we were to look at how TXN have been trading since the start of 2025, there have been pretty sideways trading with a huge decline last week.

The bulls have been trading to form a daily uptrend but did not really succeed as TXN is still trading in the range of the 12-EMA and 26-EMA, this could be due to the expectation of lower revenue hence a not so positive earnings might be expected.

We are not seeing much strength from the RSI as well as investors seem to adopt a wait-and-see attitude towards TXN earnings.

Summary

I would like to put this company as part of my technology stocks but the decline in profit even though there have been demand for their chips seem to signal some underlying headwinds and challenges.

TXN need to show a better execution on their strategy to capture the market especially on the automotive market as these EV companies are gearing up for autonomous driving in 2025.

So I would be monitoring and see if I can take a trade to keep this stock for longer term.

Appreciate if you could share your thoughts in the comment section whether you think TXN could reverse its decline in revenue in the past and post a much positive earnings and guidance.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.