The full-year results for Texas Instruments Incorporated (NASDAQ:TXN) were released last week, making it a good time to revisit its performance. The result was positive overall - although revenues of US$14b were in line with what analysts predicted, Texas Instruments surprised by delivering a statutory profit of US$5.24 per share, modestly greater than expected. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether analysts have changed their earnings models, following these results.
Taking into account the latest results, Texas Instruments's 29 analysts currently expect revenues in 2020 to be US$14.3b, approximately in line with the last 12 months. Statutory earnings per share are forecast to reduce 4.4% to US$5.13 in the same period. Yet prior to the latest earnings, analysts had been forecasting revenues of US$14.1b and earnings per share (EPS) of US$5.03 in 2020. So it's pretty clear that, although analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
The consensus price target rose 6.3% to US$136 despite there being no meaningful change to earnings estimates. It could be that analysts are reflecting the predictability of Texas Instruments's earnings by assigning a price premium. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Texas Instruments at US$164 per share, while the most bearish prices it at US$115. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Texas Instruments shareholders.
Another way to assess these estimates is by comparing them to past performance, and seeing whether analysts are more or less bullish relative to other companies in the market. These estimates imply that sales are expected to slow, with a forecast revenue decline of 0.4% a significant reduction from annual growth of 4.2% over the last five years. Compare this with our data, which suggests that other companies in the same market are, in aggregate, expected to see their revenue grow 8.2% next year. It's pretty clear that Texas Instruments's revenues are expected to perform substantially worse than the wider market.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Texas Instruments's revenues are expected to perform worse than the wider market. Analysts also upgraded their price target, suggesting that analysts believe the intrinsic value of the business is likely to improve over time.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Texas Instruments analysts - going out to 2022, and you can see them free on our platform here.
It might also be worth considering whether Texas Instruments's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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