Texas Instruments Q2 Earnings Preview: Can the Rally Continue?
Texas Instruments Q2 Earnings Preview: Can the Rally Continue?
Texas Instruments Sails Higher Ahead of Q2 Earnings as Chip Sector Sentiment Boons
- Texas Instruments is scheduled to report Q2 earnings on Tuesday, July 22.
- The stock has performed strongly in recent months as sentiment in the market improved.
- Traders are looking for EPS of $1.36 on $4.36 billion in revenue.
Texas Instruments Q2 earnings due on Tuesday, July 22
Texas Instruments (TXN) is expected to report second quarter earnings on Tuesday, July 22, after the market close. On Thursday, TXN announced a quarterly cash dividend of $1.36, payable on August 12. The company has now maintained a dividend for over 50 years.
Chip stocks are looking at solid gains so far in July, with the VanEck Semiconductor exchange-traded fund (SMH) up over 4% versus a 1.25% gain in the S&P 500. Positive news flows for the sector alongside a broader uptick in market sentiment has helped propel the move.
Nvidia (NVDA) was told by the White House that it could soon start selling its H20 artificial intelligence accelerators to China again. The Biden administration put on those restrictions, citing national security concerns.
While Texas Instruments doesn’t have as much focus in the artificial intelligence space, they do provide chips for the industrial and automotive sectors. Nonetheless, revenue rose 11% year-over-year for Texas Instruments in the first quarter, driven by strong growth in its analog segment.
What do analysts expect?
According to TradingView, Texas Instruments is expected to post earnings per share (EPS) of $1.36 on $4.36 billion in revenue for the second quarter. That would be up from an EPS of $1.22 and revenue of $3.82 billion a year ago. Last quarter, TXN reported EPS of $1.28 on $4.07 billion in revenue.
The company has a solid track record of beating EPS and revenue estimates, achieving beats in every quarter over the last reporting year. TXN is on track to rise over 4% in July following a +13.55% performance in June and a +14.25% increase in May.
Trading TXN earnings
Texas Instruments traded with an implied volatility rank (IVR) of 25.0 as of Friday, July 18. That means volatility is lower compared to the last year of trading.
According to the July 25 options expiration, the market expects a +/- 11.17 point move, or 5.15% of Friday’s 216.55 stock price. That is on the lower end of the average 5% to 10% range for S&P 500 companies.
Technically, TXN has maintained its strong momentum, with prices slightly below the November swing high, which was briefly eclipsed earlier this month. Prices recently found support at the 9-day exponential moving average (EMA) following an earlier drop below it that was quickly bought up.
Notably, the 50-day simple moving average (SMA) crossed above the 200-day SMA earlier this month, a bullish signal known as a Golden Cross. If TXN can beat estimates, the rally looks well positioned to push ahead.
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Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. @fxwestwater
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