Can Texas Instruments (TXN) Surprise This Earnings Season?
Texas Instruments (NASDAQ: TXN), or "TI,” is set to report second-quarter 2014 results on Jul 21. Last quarter, the company posted a 7.3% positive surprise. Let's see how things are shaping up for this announcement.
Factors this Past Quarter
TI's first-quarter earnings surpassed the Zacks Consensus Estimate driven by an improving mix of business and efficient cost control. However, revenues were down 1.5% sequentially but up 3.4% year over year. Distributor resales jumped 10% from last year.
TI's gross margin of 53.9% was down 29 basis points (bps) sequentially but up 625 bps from the year-ago quarter. Lower volumes led to the sequential decline.
For the second quarter of 2014, TI expects revenues within $3.14–$3.40 billion. Earnings per share are expected in the range of 55–63 cents, the mid-point of 59 cents being in line with the Zacks Consensus Estimate.
Our proven model does not conclusively show that Texas Instruments will beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 59 cents. Hence, the difference is 0.00%.
Zacks Rank: Texas Instrument has a Zacks Rank #2 (Buy) which when combined with a 0.00% ESP makes surprise prediction difficult.
We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Other Stocks to Consider
You could consider other stocks with a positive Earnings ESP and a Zacks Rank #1, 2 or 3 such as:
Gentex Corp. (NASDAQ: GNTX), with an Earnings ESP of +2.08% and a Zacks Rank #1 (Strong Buy).
AmSurg Corp. (NASDAQ: AMSG), with an Earnings ESP of +3.13% and a Zacks Rank #1.
Kirby Corporation (NYSE: KEX), with an Earnings ESP of +3.08% and a Zacks Rank #1.
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The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.