Texas Instruments (NASDAQ: $TXN) is an American technology company founded in 1930. Offering analog, embedded processing, and software solutions and driving innovation across the industrial, automotive, and personal electronics sectors. With 30,000+ employees globally and a headquarters in Dallas, Texas, it remains a pioneering force in technological advancements.
On April 23, 2024, Texas Instruments reported its first-quarter financial results, surpassing Wall Street’s expectations and fueling a surge in its stock price during extended trading hours.
Texas Instruments: Q1 Financial Performance
The company’s reported revenue of $3.66 billion marked a 16% decrease from the same quarter a year ago, reaching its lowest level since 2020. Despite this decline, it surpassed consensus estimates of $3.61 billion. Operating profit fell to $1.29 billion from $1.93 billion in Q1 2023.
Net income for the quarter declined by 35% to $1.11 billion but surpassed the estimated $982.79 million. Earnings per share (EPS) dropped from $1.85 to $1.20, reflecting a 35% decline, but still outperformed the consensus estimate of $1.06 by a noteworthy 13.21%.
During the quarter, Capital expenditures soared to $1.25 billion, marking a 60% increase from the previous year and signaling substantial investment in infrastructure. Free cash flow declined to -$231 million, primarily because of increased capital expenditures and reduced operating cash flow.
Despite the challenges, Texas Instruments returned $4.8B to shareholders as stock buybacks and dividends in the past 12 months. Cash and equivalents decreased to $2.48 billion, down 44.64% from Q1 of the previous year, reflecting the company’s strategic allocation of resources.
Uneven Recovery in Industrial Demand
According to Rafael Lizardi, Texas Instruments’ CFO, the company’s industrial equipment customers have been working through inventory backlogs, leading to an uneven recovery in demand across various end markets.
In an interview with Bloomberg, Lizardi stated, “Some end markets are still going down, and there are some that are behaving differently. Ninety days ago, all end markets in industrial were going down.”
Optimistic Outlook for Q2 2024
Texas Instruments provided an optimistic outlook for the second quarter of 2024, projecting revenue to be between $3.65 billion and $3.95 billion, at $3.8 billion, the midpoint exceeding analysts’ expectations of $3.77 billion. Additionally, Texas Instruments plans to maintain an effective tax rate of about 13%, reflecting efficient tax management.
TXN Stock Update
Texas Instruments Incorporated (TXN) experienced a positive trading session on Tuesday. Its shares closed at $165.47, marking a 1.25% increase compared to Monday’s closing price of $163.43. However, after-hours trading saw a significant surge, with shares rising over 7% to $177.50 following the company’s financial results announcement. As of Wednesday at 2:31 PM in New York ,the stock up was 4.39% to $174.39.
Over the past year, TXN has shown a modest increase of 0.61%, while the Year-to-Date (YTD) change stands at -2.93%. The company’s market capitalization is valued at $150.59 billion, with an average volume of 5.25 million shares traded over the past three months. As of March 28th, 2024, 18.74 million shares were shorted, with a short ratio of 3.3 and short interest as a percentage of float at 2.06%.
Analyst Insights: TXN Stock Price Projections
According to Wall Street analysts, the average price forecast for TXN stock stands at $169.67, with a high estimate of $210.00 and a low estimate of $125.00. This average price target reflects a 2.54% change from its recent price of $165.47. Out of the 20 analysts, 7 have issued buying ratings for the stock. However, Zacks suggests TXN may underperform the broader market in the short term.
Should You Buy TXN Stock?
Texas Instruments’ Q1 results showcased the company’s ability to navigate industry headwinds successfully. By surpassing revenue and earnings estimates, TXN reinforced investor confidence, driving a substantial after-hours surge in its stock price. The company’s strategic investment in infrastructure and commitment to shareholder returns underscore its long-term vision. With an optimistic outlook for the second quarter of 2024 and favorable analyst projections, TXN remains positioned for growth despite short-term fluctuations.
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