Does Texas Instruments Represent a Selling Opportunity?
Texas Instruments (TXN) shares are up over 6% to $102 following its earnings report. I think it represents a selling opportunity.
The company beat on the bottom line by $0.02 but missed revenues with a YoY decline. More worrisome is the company lowered next quarters guidance by some 17% to $1.12 per share saying they see no end to the slowdown.
TXN also guided for Q1 revenue of $3.34 billion to $3.62 billion, down 4% to 12% annually. Those guidance ranges fall mostly below consensus estimates of $3.6 billion and $1.20.
Other negatives include an increase in inventory from 131 days to 152 days, a drop in book-to-bill ratio to 0.98 ( a reading below 1.0 is considered negative) and a decline in operating margin.
Granted, the stock has sold off some 20% from the summer high, so it has some bad news built in. But it still trades at 20x trailing eps, which were at peak earnings and a relatively high p/e for this cyclical sector.
Highlighting that the…
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