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why profit from chip stocks growing and Texas Instruments (NASDAQ: TXN) One of them. The company’s first-quarter results and outlook weren’t terrible, but they weren’t rally-inspiring either. You can expect the same for groups. Texas Instruments is a diversified chipmaker with his six ends his markets spanning a wide range of use his cases including consumer electronics, industrial and automotive.
The company says it has seen weakness in all but one of its end markets, automotive, and not all chip makers have that kind of exposure, enough to make a difference. We do not have any exposure.
Texas Instruments dominates.lukewarm guidance
Texas Instruments is enough quarters Despite a 10.8% year-on-year decrease in sales. Earnings were slightly above Marketbeat.com consensus, and the company’s profit margins were above expectations. The bad news is that revenue has also been steadily declining, and that trend may continue in the second quarter. Margins were impacted by deleveraging and higher costs, but not as much as expected. That made GAAP earnings $1.85 or $0.07 higher than expected, beating the strength of the top line.
Guidance is fine, but it’s not a catalyst for higher stock prices. The company expects earnings of $41.7 billion to $4.53 billion, which is at the midpoint below consensus and opens the door to successive declines. Even at the high end of the range, the revenue outlook is down 13% compared to last year, accelerating the decline from the first quarter.
The point management wants to leave investors with is strong cash flow and strong FCF. The company generated $7.7 billion in cash flow on his TTM basis, with FCF margins at his 23% of earnings. While this is expected to keep buybacks and dividends gaining momentum, it may not be enough to keep stock trading status quo.
Texas Instruments analyst cap upside
Analysts haven’t bailed out Texas Instruments, but they’re starting to lower their price targets. Marketbeat’s analyst tracking page picked up on his four price target cuts that affect the consensus target. The consensus started moving higher ahead of the report due to an increase in pre-release targets, but that trend appears to be dead upon arrival. Further declines are likely in the weeks, months and quarters.
“While (Texas Instruments) leads the industry in market share and solid execution, TXN faces challenges from peak margins, high inventories and macro slowdowns noted in (gross margin). We believe China/US could slow down in the second half,” Mizuho analyst Vijay Rakesh wrote in a note.
Strong Capital Returns for Texas Instruments
The capital return program may not be affected at this time.The company’s 2.9% yield and 19-year history of growth It seems safe, and share buybacks are also expected. The company bought back about $103 million during the quarter and will continue to do so on a quarterly basis, although the pace may slow. The dividend payout ratio is about 48% of the earnings forecast.
The chart is unfavorable for the bulls, but a significant drop is not expected either. The market has retreated since the release but is showing some support near the midpoint of the trading range. the buyer is waiting For pullbacks, at a level sufficient to allow deeper pullbacks without breaking critical supports.