Texas Instruments Q4 Results: Challenges Ahead for TXN

Texas Instruments struggles in Q4 performance amid setbacks. Though earnings beat estimates, a decline in revenue and challenges in Embedded Processing signify potential risks ahead.

Date: 02-02-2025

AI Rating: 4

Earnings Per Share (EPS): Texas Instruments reported earnings of $1.30 per share, which exceeded the Zacks Consensus Estimate by 11 cents. However, this reflects a year-over-year decline of 12.8%, indicating challenges in maintaining profitability.

Revenue Growth: The company generated revenues of $4.01 billion, surpassing estimates by $136 million, but this still marks a decrease of 1.7% from the same quarter last year. The year-over-year decline is concerning as it shows a potential downward trend in revenue streams.

Net Income: The analysis did not provide specific figures regarding net income, but the overall performance trends, along with the decline in both EPS and revenue, suggest that net income may also face downward pressure.

Profit Margins: The gross profit for the fourth quarter was $2.31 billion, or 58% of revenues; however, this was a contraction of 200 basis points compared to the prior year due to lower factory utilization and reduced revenues. This contraction signals margin pressures and operational inefficiencies.

Free Cash Flow (FCF): Information regarding free cash flow was not mentioned in the text.

Return on Equity (ROE): No specific details about return on equity were provided in the analysis.

The report indicates that Texas Instruments is experiencing significant challenges, particularly within its Embedded Processing segment, which saw a steep 18% year-over-year decline. This weakness is attributed to factors like underutilization of manufacturing facilities and cyclical downturns in demand, impacting overall company performance.

The company’s cautious guidance for the upcoming quarters, coupled with downward revisions in earnings estimates, enhances the outlook for investors who may view TXN as a riskier investment choice in the near term. Overall, while the Analog segment shows resilience with a modest growth of 2%, the encompassing challenges suggest that investors may need to consider selling or avoiding TXN stock for now.

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