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Can Texas Instruments (TXN) Surprise This Earnings Season? - Analyst Blog
Texas Instruments ( TXN ), or "TI," is set to report fourth-quarter 2013 results on Jan 21. Last quarter, it posted a 1.75% negative surprise. Let us see how things are shaping up for this announcement.
Growth Factors this Past Quarter
TI's third-quarter earnings missed the Zacks Consensus Estimate by a penny. However, revenues were up 6.5% sequentially but down 4.3% year over year. The sequential increase was driven by stronger demand in the computing, game console and handset markets that had been very weak in the last quarter.
TI's gross margin of 54.8% was up 331 basis points (bps) sequentially and 528 bps from the year-ago quarter. The improving product mix led to higher gross margins in the third quarter.
Last month, TI narrowed its revenue and earnings expectations for the fourth quarter of 2013. TI now expects revenues around $2.92 billion-$3.04 billion, the mid-point being above the Zacks Consensus Estimate of $2.99 billion. The earnings per share guidance is expected in the range of 44 cents-48 cents.
Our proven model does not conclusively show that Texas Instruments will beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 47 cents. Hence, the difference is 0.00%.
Zacks Rank #3 (Hold): TI's Zacks Rank when combined with a 0.00% ESP makes surprise prediction difficult.
We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Other Stocks to Consider
You could consider other stocks with a positive earnings ESP and Zacks Rank #1, 2 or 3 such as:
Bally Technologies, Inc. ( BYI ) with Earnings ESP of +3.13% and a Zacks Rank #1 (Strong Buy)
Western Digital Corporation ( WDC ) with Earnings ESP of +0.48% and a Zacks Rank #1
Cirrus Logic Inc. ( CRUS ) with Earnings ESP of +4.41% and a Zacks Rank #1
BALLY TECH INC (BYI): Free Stock Analysis Report
CIRRUS LOGIC (CRUS): Free Stock Analysis Report
TEXAS INSTRS (TXN): Free Stock Analysis Report
WESTERN DIGITAL (WDC): Free Stock Analysis Report
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