Texas Instruments (TXN) Tops Q2 Earnings & Revenue Estimates
Zacks Investment Research | Jul 25, 2017 10:05PM ET
Texas Instruments (NASDAQ:TXN) or TI’s second-quarter 2017 earnings and revenues came ahead of expectations.
Earnings of $1.03 per share surpassed the Zacks Consensus Estimate by 8 cents. Revenues of $3.7 billion beat the consensus mark by $139 million.
The strong results were driven by strength in auto, industrial, communications and personal electronics markets.
Texas Instruments continues to prudently invest its R&D dollars into several high-margin, high-growth areas of the analog and embedded processing markets. This is gradually increasing its exposure to industrial and automotive markets and increasing dollar content at customers, while reducing exposure to volatile consumer/computing markets.
Internally, the company has always executed rather well. It, along with chipmaker Intel (NASDAQ:INTC) , is one of the few semiconductor companies that depend on internal capacity for manufacturing the bulk of its devices. Since the company usually builds out capacity well ahead of demand, it is able to make opportunistic purchases. As a result, it is able to contain capex at up to 4% of sales even while on an expansion plan.
At the call, management stated that the company will remain focused on increasing free cash flow per share and strengthening competitive advantages. Notably, free cash flow over the past 12 months was $4.04 billion or 28.5% of revenues. Overall, we remain optimistic about TI’s compelling product line, the differentiation in its business and manufacturing efficiencies that include growing 300-millimeter Analog output.
However, risks associated with a high debt level persist. Year to date, the stock has underperformed the Original post
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