Texas Instruments Incorporated (TXN) is getting investors buzzing as the earnings season heats up. All eyes are on this semiconductor heavyweight. Let’s break down why.
Earnings Guidance and Projections: Texas Instruments’ earnings guidance for Q3 and Q4 2023 reveals a cautious approach. The company forecasts a modest earnings growth of 5.2% per year, which outshines the current savings rate of 2.2% but falls short of the anticipated 14.7% growth across the broader U.S. market. This tepid forecast begs the question: Can TXN keep pace with market expectations?
Stock Price Targets & Ratings: As of December 30, 2023, analysts’ average price target for TXN stands at $163.05, with a 52-week range between $185.11 and $138.86—a sign of moderate volatility. Driven by cautious optimism, analysts have issued a “Hold” rating, backed by 3 sell ratings, 9 hold ratings, and 6 buy ratings. The 12-month price prediction of $174.55 hints at a potential 10.25% upside. High and low price targets of $215.00 and $137.00 show a mixed bag of possibilities.
TXN’s robust market position is evident as its analog segment accounts for a significant portion of its revenue, while the embedded processing segment significantly bolsters the company’s diversified income streams. This dual revenue engine solidifies TXN’s standing in the competitive semiconductor arena.
The company’s enticing market-beating dividend is a magnet for income-focused investors. Looking ahead, projections suggest TXN could achieve a 12% annual EPS growth from 2024 to 2027, potentially translating into a whopping 17.5% annual ROI. If TXN rides the anticipated semiconductor bull market wave between 2025 and 2026, we could see its stock hitting around $246 by 2027. That’s the golden shimmer through the clouds that many investors are eyeing.
The road isn’t entirely smooth. TXN faces the cyclical challenges inherent in the semiconductor industry. Recent slowdowns pose near-term hurdles, and with an elevated current valuation, its ability to outperform the S&P 500 may be restrained, especially if a new bull market emerges.
Analyst Sentiments: A Balanced Outlook: The analyst community remains cautiously optimistic. While acknowledging TXN’s growth potential, the consensus is to adopt a measured approach. The “Hold” sentiment suggests keeping positions steady while keeping a sharp eye on the company’s performance and broader market trends.
These numbers paint a vivid picture of TXN’s financial landscape. Despite facing some headwinds, the company’s rock-solid foundation and attractive dividends make it a stock to watch closely.
| Metric | Q2 2024 | Q2 2023 | Percentage Change |
|---|---|---|---|
| Revenue | $3.82 billion | $4.53 billion | -15.4% |
| Net Income | $1.13 billion | $1.72 billion | -34.3% |
| Earnings per Share (EPS) | $1.22 | $1.87 | -34.8% |
| Dividend per Share | $1.30 | $1.24 | 4.8% |
| Stock Repurchases | $71 million | $2.03 billion | -96.5% |
| Total Cash Returned | $1.26 billion | $6.45 billion | -80.6% |
| Basic Average Shares Out. | 908 million | 908 million | 0% |
| Diluted Average Shares Out. | 916 million | 916 million | 0% |
| Operating Taxes (GAAP) | $289 million | – | – |
| Free Cash Flow (non-GAAP) | $3.18 billion | – | – |
| Cash Flow from Operations (GAAP) | $7.37 billion | – | – |
| Cash and Cash Equivalents | $3.44 billion | – | – |