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

Zacks Equity Research

Texas Instruments (TXN) closed at $122.74 in the latest trading session, marking a +0.46% move from the prior day. This change lagged the S&P 500's 0.66% gain on the day. At the same time, the Dow added 1%, and the tech-heavy Nasdaq gained 0.38%.

Coming into today, shares of the chipmaker had lost 4.95% in the past month. In that same time, the Computer and Technology sector lost 6.46%, while the S&P 500 lost 5.01%.

Investors will be hoping for strength from TXN as it approaches its next earnings release. The company is expected to report EPS of $1.41, down 10.76% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $3.81 billion, down 10.58% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $5.34 per share and revenue of $14.70 billion. These totals would mark changes of -4.47% and -6.89%, respectively, from last year.

Any recent changes to analyst estimates for TXN should also be noted by investors. These revisions help to show the ever-changing nature of near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. TXN currently has a Zacks Rank of #3 (Hold).

In terms of valuation, TXN is currently trading at a Forward P/E ratio of 22.9. This represents a premium compared to its industry's average Forward P/E of 16.68.

We can also see that TXN currently has a PEG ratio of 2.26. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Semiconductor - General was holding an average PEG ratio of 1.83 at yesterday's closing price.

The Semiconductor - General industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 217, which puts it in the bottom 16% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow TXN in the coming trading sessions, be sure to utilize Zacks.com.

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