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Texas Instruments Incorporated (NASDAQ:TXN) defied analyst predictions to release its quarterly results, which were ahead of market expectations. Texas Instruments delivered a significant beat to revenue and earnings per share (EPS) expectations, with sales hitting US$3.8b and statutory EPS reaching US$1.45, both beating estimates by more than 10%. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Following the latest results, Texas Instruments' 30 analysts are now forecasting revenues of US$15.0b in 2021. This would be a decent 9.5% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to accumulate 8.1% to US$5.80. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$14.5b and earnings per share (EPS) of US$5.48 in 2021. So there seems to have been a moderate uplift in sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.
With these upgrades, we're not surprised to see that the analysts have lifted their price target 10% to US$158per share. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Texas Instruments, with the most bullish analyst valuing it at US$185 and the most bearish at US$116 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Texas Instruments' past performance and to peers in the same industry. It's clear from the latest estimates that Texas Instruments' rate of growth is expected to accelerate meaningfully, with the forecast 9.5% revenue growth noticeably faster than its historical growth of 2.4%p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 9.7% next year. Texas Instruments is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Texas Instruments following these results. There was also an upgrade to revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
With that in mind, we wouldn't be too quick to come to a conclusion on Texas Instruments. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Texas Instruments going out to 2024, and you can see them free on our platform here..
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Texas Instruments , and understanding these should be part of your investment process.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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