Texas Instruments (TXN) Q3 Earnings Report Preview: What To Look For

Adam Hejl /
2023/10/23 3:31 am EDT

Analog chip manufacturer Texas Instruments (NASDAQ:TXN) will be reporting results tomorrow after market close. Here's what to look for.

Last quarter Texas Instruments reported revenues of $4.53 billion, down 13.1% year on year, beating analyst revenue expectations by 3.67%. It was a weaker quarter for the company, with a decline in its gross margin and an increase in its inventory levels.

Is Texas Instruments buy or sell heading into the earnings? Read our full analysis here, it's free.

This quarter analysts are expecting Texas Instruments's revenue to decline 12.5% year on year to $4.59 billion, a further deceleration on the 12.9% year-over-year decrease in revenue the company had recorded in the same quarter last year. Adjusted earnings are expected to come in at $1.85 per share.

Texas Instruments Total Revenue

The analysts covering the company have been growing increasingly bullish about the business heading into the earnings, with revenue estimates seeing three upward revisions over the last thirty days. The company only missed Wall St's revenue estimates once over the last two years, and has on average exceeded top line expectations by 3.87%.

Looking at Texas Instruments's peers in the semiconductors segment, some of them have already reported Q3 earnings results, giving us a hint of what we can expect. SMART's revenues decreased 27.7% year on year, missing analyst estimates by 15.6% and Lam Research reported revenue decline of 31.4% year on year, exceeding estimates by 1.94%. SMART traded down 23.6% on the results, Lam Research was down 3.5%.

Read our full analysis of SMART's results here and Lam Research's results here.

Technology stocks have been hit hard by fears of higher interest rates and while some of the semiconductors stocks have fared somewhat better, they have not been spared, with share price declining 5.43% over the last month. Texas Instruments is down 7.68% during the same time, and is heading into the earnings with analysts' average price target of $181.1, compared to share price of $148.6.

One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar.

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The author has no position in any of the stocks mentioned.