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Texas Instruments (TXN) Gains But Lags Market: What You Should Know

Zacks Equity Research

Texas Instruments (TXN) closed the most recent trading day at $130.14, moving +1.12% from the previous trading session. This change lagged the S&P 500's 1.42% gain on the day. Elsewhere, the Dow gained 1.42%, while the tech-heavy Nasdaq added 1.4%.

Heading into today, shares of the chipmaker had gained 1.49% over the past month, lagging the Computer and Technology sector's gain of 1.95% and outpacing the S&P 500's gain of 0.38% in that time.

TXN will be looking to display strength as it nears its next earnings release, which is expected to be October 22, 2019. In that report, analysts expect TXN to post earnings of $1.41 per share. This would mark a year-over-year decline of 10.76%. Meanwhile, our latest consensus estimate is calling for revenue of $3.81 billion, down 10.58% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $5.33 per share and revenue of $14.69 billion, which would represent changes of -4.65% and -6.93%, respectively, from the prior year.

Any recent changes to analyst estimates for TXN should also be noted by investors. Recent revisions tend to reflect the latest near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. TXN is currently a Zacks Rank #4 (Sell).

Digging into valuation, TXN currently has a Forward P/E ratio of 24.14. This valuation marks a premium compared to its industry's average Forward P/E of 18.64.

Meanwhile, TXN's PEG ratio is currently 2.38. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. TXN's industry had an average PEG ratio of 1.95 as of yesterday's close.

The Semiconductor - General industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 221, which puts it in the bottom 14% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.

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