Texas Instruments' 3Q to Give an Early Glimpse at Auto Recovery -- Earnings Preview

 By Maria Armental

Texas Instruments Inc. is slated to report third-quarter results on Tuesday. Investors will be drilling down on the auto/industrial recovery. Here's what you need to know:

PROFIT: Analysts expect profit to fall to about $1.28 a share, according to FactSet data as of Monday evening. TI projected $1.14 to $1.34 a share.

REVENUE: Analysts expect revenue to fall to about $3.44 billion, according to FactSet, compared with TI's guidance of $3.26 billion to $3.54 billion.

WHAT TO WATCH:

PANDEMIC: Remote work and study trends tied to the pandemic drove higher demand in such things as personal electronics like PCs and tablets, while automotive saw a big hit, driving TI's revenue decline in the second quarter. Mizuho's Vijay Rakesh and Jason Getz pointed to a strong auto/industrial recovery, with China auto production tracking above pre-pandemic levels, the analysts said, and U.S. auto and truck production running at full force and low dealer inventory. Investors will be looking for more details on the recovery--and sustainability.

INVENTORY: TI has built inventories to limit exposure to supply chain disruptions, with inventory dollars up $135 million at the second quarter from the end of 2019 and days at 166, compared with 144 at the end of 2019. TI has been reducing the number of distributors, a change that company officials said will help maintain short lead times and availability to meet unforecasted customer demand. Company officials have said they intend to update their thoughts on the appropriate inventory range at the company's capital management call in February.

Write to Maria Armental at maria.armental@wsj.com

(END) Dow Jones Newswires

October 20, 2020 09:14 ET (13:14 GMT)

Texas Instruments (NASDAQ:TXN)
Historical Stock Chart
From Mar 2024 to Apr 2024