Markets

Texas Instruments (TXN) Q3 Earnings: What to Expect?

Texas Instruments Inc.TXN is set to report third-quarter 2015 results on Oct 21. Last quarter, it posted in line results. Let's see how things are shaping up for this announcement.

Factors to Consider

Texas Instruments reported disappointing second quarter results with the top line missing the Zacks Consensus Estimate and the bottom line matching the same.

Revenues were up 2.6% sequentially but down 1.8% year over year and within the company guided range. Revenues were adversely impacted by currency, the impact of which was $45 million (as expected).

The softness in the personal electronics (mainly PCs) and communications equipment (wireless infrastructure) markets continued, but while the PC decline was as expected, weakness in wireless infrastructure (down 50% from last year) was greater than expected. Enterprise systems were down due to DLP projectors as expected.

The weakness in both markets and FX concerns are expected to affect results in the soon-to-be reported quarter.

That said, Texas Instruments continues to prudently invest its R&D dollars into several high-margin, high-growth areas of the analog and embedded processing markets. This is gradually increasing its exposure to the industrial and automotive markets and increasing dollar content at customers, while reducing its exposure to the volatile consumer/computing markets.

For the third quarter, management expects revenues between $3.15 billion and $3.41 billion (up 1.5% sequentially at the mid-point). Currency will have a $40 million impact on revenues. The Zacks Consensus Estimate is pegged at $3.28 billion. Earnings for the quarter are expected to be in a range of 62 to 72 cents.

Earnings Whispers?

Our proven model does not conclusively show that Texas Instruments will beat estimates this quarter. This 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.

Negative Zacks ESP: The Most Accurate estimate stands at 66 cents while the Zacks Consensus Estimate is pegged higher at 67 cents. This translates to a difference of -1.49%.

Zacks Rank #4 (Sell): We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement,especially when the company is seeing negative estimate revisions.

Stocks to Consider

You can consider the following stocks, which have a favorable combination of a positive Earnings ESP and Zacks Rank #1, 2 or 3:

Amgen Inc. AMGN , with an Earnings ESP of +1.27% and a Zacks Rank #1.

Anika Therapeutics Inc. ANIK , with an Earnings ESP of +2.94% and a Zacks Rank #1.

SkyWest Inc. SKYW , with an Earnings ESP of +4.55% and a Zacks Rank #1.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

TEXAS INSTRS (TXN): Free Stock Analysis Report

AMGEN INC (AMGN): Free Stock Analysis Report

SKYWEST INC (SKYW): Free Stock Analysis Report

ANIKA THERAPEUT (ANIK): Free Stock Analysis Report

To read this article on Zacks.com click here.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

SKYW ANIK TXN AMGN

Other Topics

Earnings Stocks

Latest Markets Videos

Zacks

Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

Learn More