Texas Instruments is trading higher after-hours: what’s fuelling the stock?

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Shares of Texas Instruments Inc (NASDAQ: TXN) jumped 5.0% in extended trading after the chipmaker reported market-beating results for its fiscal fourth quarter. TXN is on Invezz’s list of the top three undercovered semiconductor stocks for 2022.  

What the earnings report tells us

Texas said its net income printed at $2.14 billion that translates to $2.27 per share. In the same quarter last year, its net income was capped at $1.69 billion or $1.80 per share. At $4.83 billion, the semiconductor company recorded a year-over-year growth of 19% in its quarterly revenue.

According to FactSet, experts had forecast $1.95 in EPS on $4.43 billion in revenue. Sales were up 20% in analog electronics and 6.0% in embedded processors – both ahead of analysts’ estimates.

For the full financial year, the Dallas-headquartered company noted $7.77 billion of profit on $18.34 billion in revenue, beating Street expectations by a significant margin. Also on Tuesday, Gradient Investments’ Mariann Montagne said the outlook for semiconductor stocks is positive.

Future guidance and CEO’s remarks

For Q1, Texas Instruments is now calling for up to $2.29 in per-share earnings on $4.5 billion to $4.9 billion of revenue. In comparison, analysts had predicted $1.87 of EPS on $4.37 billion in revenue. In the earnings press release, CEO Rich Templeton said:

$8.8 billion in full-year cash flow from operations again underscored the strength of our business model. Free cash flow was $6.3 billion and 34% of revenue. This reflects the quality of our product portfolio and efficiency of our manufacturing strategy, including the benefit of 300-mm production.

Texas Instruments spent $4.4 billion on dividends and stock repurchases last year. Its dividend represented 62% of FCF. Earlier in January, the chipmaker revealed a new radar sensor to expand its footprint in advanced driver assistance systems (ADAS).

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