Texas Instruments (TXN) Outpaces Stock Market Gains: What You Should Know

·3 min read

Texas Instruments (TXN) closed at $194.45 in the latest trading session, marking a +1.02% move from the prior day. This change outpaced the S&P 500's 0.75% gain on the day.

Prior to today's trading, shares of the chipmaker had lost 2.2% over the past month. This has was narrower than the Computer and Technology sector's loss of 2.38% and lagged the S&P 500's loss of 0.05% in that time.

TXN will be looking to display strength as it nears its next earnings release, which is expected to be October 26, 2021. In that report, analysts expect TXN to post earnings of $2.06 per share. This would mark year-over-year growth of 42.07%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $4.69 billion, up 23% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $7.92 per share and revenue of $18.04 billion. These totals would mark changes of +32.66% and +24.75%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for TXN. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, 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. Within the past 30 days, our consensus EPS projection has moved 0.65% higher. TXN is holding a Zacks Rank of #2 (Buy) right now.

In terms of valuation, TXN is currently trading at a Forward P/E ratio of 24.32. This represents a premium compared to its industry's average Forward P/E of 19.21.

Meanwhile, TXN's PEG ratio is currently 2.61. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Semiconductor - General industry currently had an average PEG ratio of 2.65 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 43, which puts it in the top 17% 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.

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


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