|Bid||97.62 x 800|
|Ask||98.26 x 1400|
|Day's range||97.30 - 100.42|
|52-week range||94.16 - 120.75|
|Beta (3Y Monthly)||1.26|
|PE ratio (TTM)||22.60|
|Earnings date||23 Oct 2018|
|Forward dividend & yield||3.08 (3.09%)|
|1y target est||122.63|
Texas Instruments (TXN) has been improving its profit margins by increasing its revenue and reducing production costs. The company’s main focus is on increasing its earnings and free cash flow per share. Texas Instruments expects its third-quarter EPS to rise 20.6% YoY to $1.52 (including an estimated discrete tax benefit of $10 million). Analysts expect Texas Instruments’ EPS to increase to $1.53 in the third quarter and to $1.38 in the fourth quarter, resulting in its EPS rising 56.7% YoY to $5.66 in fiscal 2018.
The company’s profitability has been boosted by its higher revenue and lower production costs. Texas Instruments has been transitioning its analog production from 200mm (millimeter) to 300mm wafers, reducing its cost per chip by 40%. In 2017, the company manufactured 40% of its analog output on 300mm wafers, leaving it a lot of room to reduce production costs. Higher revenue and lower production costs expanded Texas Instruments’ gross margin by 90 basis points YoY (year-over-year) to 65.2% in the second quarter.
In addition to being involved in the industrial and enterprise markets, Texas Instruments (TXN) caters to companies that make consumer electronics such as PCs, handsets, TVs, and home appliances. In 2017, the company earned 25% of its revenue from the personal electronics market. In the second quarter, the company’s personal electronics revenue grew by low-single digits as strength in some sectors was offset by weakness in others.
In the latest trading session, Texas Instruments (TXN) closed at $99.54, marking a -1.97% move from the previous day.
We expect Texas Instruments (TXN) to perform well on the back of strength in analog, and embedded processing markets. Yet, rise of competition in the auto and industrial space may impact its results.
Texas Instruments (TXN) caters to a broad range of markets, diversifying its earnings. The company has been reducing its investments in the slowing personal electronics market to focus on the fast-growing industrial and automotive markets. However, it has maintained a presence in the personal electronics market, as it believes mobile technology and PCs are here to stay.
Texas Instruments (TXN) supplies power management chips, analog IC (integrated circuits), and microcontrollers, which are used in almost all electronic devices, spanning industrial, automotive, communication equipment, personal electronics, and enterprise system markets. Texas Instruments is the world’s largest analog IC company, earning 67% of its revenue from the analog market and 24% from embedded processing. The personal electronics market is seasonal. The second and third quarters have been strong for Texas Instruments, with the company typically reporting double-digit sequential growth in the third quarter.
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