Is chipmaker Texas Instruments stock a buy after beating fourth-quarter revenue estimates?

By: Motiur Rahman
Motiur Rahman
Md Motiur is a Financial Analyst at Invezz covering the North American, European and Asian stock markets. He has… read more.
on Jan 27, 2022
  • TXN exceeded analysts’ expectations for the fourth quarter.
  • The company reported earnings of $2.15 per share on $4.7 billion revenues.
  • However, the stock is still bearish.

On late Tuesday, January 25, Texas-based chipmaker Texas Instruments Incorporated (NASDAQ:TXN) beat analyst expectations for the fourth quarter. As a result, TXN’s stock soared in after-hours trading.

According to the earnings report that was filed by the company to the Security Exchange Commission (SEC), the Dallas-based company earned $2.27 per share on sales of $4.83 billion, in the December quarter. As a result, Texas Instruments’ earnings increased by 26% year over year, while sales increased by 19%.

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In the subsequent company’s news release, Texas Instruments CEO Rich Templeton claimed that the strong demand for industrial and automotive chips drove the company’s profits higher in the fourth quarter.

Based on the outlook’s midpoint, Texas Instruments will earn $2.15 per share on $4.7 billion in revenues in the current quarter. These expected figures are way above many analysts’ projections and forecasts.

Analysts expected Texas Instruments to earn $1.87 per share on sales of $4.37 billion. In the previous quarter, Texas Instruments made $1.87 per share on $4.29 billion in sales.

TXN stock spikes in late trades

Source – TradingView

Yesterday TXN closed at $178.33; this was a 1.75% drop from the previous trading day. Initially, the stock opened the trading day with a gap up after the emergence of the positive news that the company had exceeded fourth-quarter revenue estimates.

However, the hype faded and the stock closed red on the day. Despite this, the stock still outperformed the S&P 500, which is currently doing very awful as all signs indicate that we are entering a bear market.

From an expert perspective, TXN isn’t a buy right now. In its chart, the stock is displaying a bear flag pattern right now! When prices pull back somewhat after a dramatic downward advance, it forms a bear flag pattern, and this is exactly what is happening to TXN. This indicates a fantastic opportunity for the short-sellers.

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