Texas Instruments Beats Third-Quarter Estimates and Guides Well Above Forecasts for Q4

Texas Instruments (NASDAQ: TXN) beat analysts’ third-quarter forecasts today and guided fourth-quarter revenue and earnings above consensus, the average analyst estimate. The US analog and embedded chipmaker reported revenue of $6.055bn, up 28% from $4.742bn a year earlier, and earnings of $2.62 a share, up from $1.48.

The shares closed the regular session at $284.65, up 2.5%, before the results were released. They were down 0.3% in after-hours trading.

Analysts surveyed by Yahoo Finance had expected revenue of $5.93bn, so the result was about 2.1% higher. They had expected earnings of $2.43 a share, a $0.19 beat of about 7.8%, though Yahoo does not say which earnings basis that estimate uses, so the comparison is approximate.

Analog, the largest division, grew revenue 32% to $4.911bn with operating profit of $2.505bn. Embedded Processing rose 21% to $858m, and its operating profit more than doubled to $227m from $108m. Chief executive Haviv Ilan pointed to continued broad growth in industrial, automotive and data centre markets.

Group operating profit rose 73% to $2.874bn and net income 78% to $2.425bn. Over the past 12 months the company generated $8.4bn of free cash flow, the cash left after capital spending and including CHIPS Act proceeds, or 40.6% of revenue against 14.0% a year earlier, and returned $5.8bn to shareholders. Third-quarter capital spending fell to $463m from $1.197bn, and the declared dividend rose to $1.42 a share from $1.36.

The fourth-quarter outlook is the stronger comparison. TI guided revenue of $5.80bn to $6.30bn, a $6.05bn midpoint about 5.2% above the $5.75bn analyst average. Guided earnings of $2.45 to $2.79 a share have a $2.62 midpoint, about 14.9% above the $2.28 average, and the whole range sits above the highest Yahoo estimate of $2.40.

The guided revenue midpoint of $6.05bn sits just below the $6.055bn reported for the third quarter, and the earnings midpoint of $2.62 matches the third-quarter result. The third-quarter figure included a 1-cent reduction that was not in the company’s original guidance.