Texas Instruments (TXN) Q3 Earnings Preview: What To Expect

Texas Instruments shares are trading lower by roughly 4.5% over the trailing week. Traders and investors are watching for the company's Q3 earnings report.

Texas Instruments Inc TXN shares are trading lower by roughly 4.5% to $196.32 over the trailing week. Traders and investors are watching for the company's third-quarter earnings report which is confirmed for Tuesday's after-hours session. According to analyst consensus estimates, TXN is expected to report EPS of $1.38 on revenue of $4.12 billion.

What TXN Investors Are Watching For: In the second quarter, Texas Instruments reported earnings of $1.22 per share, surpassing the analyst consensus of $1.17. Revenue for the quarter matched expectations at $3.82 billion.

While the company saw declines in its industrial and automotive segments, other markets experienced growth, reflecting some resilience despite the challenges in key areas. Another standout aspect of the second-quarter was the company's robust cash generation, with operating cash flow totaling $6.4 billion over the trailing 12 months and free cash flow reaching $1.5 billion.

CEO Haviv Ilan attributed these results to Texas Instruments’ solid business model, the advantages of its 300mm wafer production, and a diverse product portfolio.

The company, in July, forecasts its third-quarter revenue to fall between $3.94 billion and $4.26 billion, signaling a potential increase from the $3.82 billion reported in the second quarter.

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Analysts are expecting revenue of around $4.12 billion, which would indicate modest sequential growth. Earnings per share are projected to rise to $1.38, up from $1.22 in the previous quarter.

What Else: Investors will be particularly focused on the performance of Texas Instruments’ automotive and industrial sectors, which saw sequential declines last quarter. There will be strong interest in whether the company has been able to reverse or mitigate these trends in the third-quarter, especially given its focus on these segments as core growth areas.

Additionally, attention will likely be on the company's ability to maintain strong margins and cash flow, considering its reputation for consistent cash generation and financial discipline.

With a confirmed tax rate expectation of around 13% and ongoing macroeconomic uncertainties affecting semiconductor demand, Texas Instruments’ ability to navigate these challenges will be closely scrutinized as investors await the third-quarter results.

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How To Buy TXN Stock

By now you're likely curious about how to participate in the market for Texas Instruments – be it to purchase shares, or even attempt to bet against the company.

Buying shares is typically done through a brokerage account. You can find a list of possible trading platforms here. Many will allow you to buy ‘fractional shares,' which allows you to own portions of stock without buying an entire share. For example, some stock, like Berkshire Hathaway, or Amazon.com, can cost thousands of dollars to own just one share. However, if you only want to invest a fraction of that, brokerages will allow you to do so.

In the the case of Texas Instruments, which is trading at $198.47 as of publishing time, $100 would buy you 0.5 shares of stock.

If you're looking to bet against a company, the process is more complex. You'll need access to an options trading platform, or a broker who will allow you to ‘go short' a share of stock by lending you the shares to sell. The process of shorting a stock can be found at this resource. Otherwise, if your broker allows you to trade options, you can either buy a put option, or sell a call option at a strike price above where shares are currently trading – either way it allows you to profit off of the share price decline.

According to data from Benzinga Pro, TXN has a 52-week high of $214.66 and a 52-week low of $139.48.