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Texas Instruments Incorporated (NASDAQ:TXN) just released its latest annual results and things are looking bullish. The company beat expectations with revenues of US$14b arriving 3.4% ahead of forecasts. Statutory earnings per share (EPS) were US$5.97, 8.7% ahead of estimates. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Texas Instruments after the latest results.
Taking into account the latest results, the current consensus from Texas Instruments' 27 analysts is for revenues of US$16.5b in 2021, which would reflect a meaningful 14% increase on its sales over the past 12 months. Statutory earnings per share are predicted to swell 10% to US$6.69. In the lead-up to this report, the analysts had been modelling revenues of US$15.2b and earnings per share (EPS) of US$5.87 in 2021. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a decent improvement in earnings per share in particular.
It will come as no surprise to learn that the analysts have increased their price target for Texas Instruments 11% to US$182on the back of these upgrades. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Texas Instruments analyst has a price target of US$206 per share, while the most pessimistic values it at US$140. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's clear from the latest estimates that Texas Instruments' rate of growth is expected to accelerate meaningfully, with the forecast 14% revenue growth noticeably faster than its historical growth of 2.0%p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 9.9% next year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Texas Instruments to grow faster than the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Texas Instruments' earnings potential next year. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Texas Instruments analysts - going out to 2023, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 1 warning sign for Texas Instruments you should be aware of.
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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