Why Is Texas Instruments (TXN) Down 8% Since Last Earnings Report?

It has been about a month since the last earnings report for Texas Instruments (TXN). Shares have lost about 8% in that time frame, underperforming the S&P 500.But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Texas Instruments due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its latest earnings report in order to get a better handle on the important drivers.Texas Instruments Q3 Earnings Beat Estimates, Revenues Rise Y/YTexas Instruments reported better-than-expected third-quarter 2025 results. The company reported third-quarter earnings per share of $1.48, which beat the Zacks Consensus Estimate by 0.7% and came at the midpoint of management’s guidance of $1.36 to $1.60. The quarterly earnings increased 1% year over year.Texas Instruments reported revenues of $4.74 billion, which beat the Zacks Consensus Estimate by 2.1%. The figure came above the midpoint of management’s guidance of $4.45-$4.80 billion. The top line rose 14% year over year.Texas Instruments’ Q3 Top-Line DetailsSegment-wise, Texas Instruments operates under three business divisions: Analog, Embedded Processing and Other.Analog: Revenues of $3.73 billion were generated from the segment (78.6% of total revenues), up 16% from the year-ago quarter’s level. The figure came above our model estimate of $3.63 billion.Embedded Processing: Revenues amounted to $709 million (15% of total revenues), up 9% year over year. The figure surpassed our model estimate of $706.1 million.Other: Revenues totalled $304 million (6.4% of total revenues), up 11% from the prior-year quarter’s level. The figure surpassed our model estimate of $301.6 million.Texas Instruments’ Operating DetailsTexas Instruments’ gross profit increased 10% year over year to $2.72 billion. Gross margin of 57.4% contracted 220 bps year over year.Selling, general and administrative (SG&A) expenses grew 6.8% year over year to $457 million. As a percentage of revenues, SG&A expenses contracted 70 bps year over year to 9.6%.Research and development (R&D) expenses grew 5.3% to $518 million. As a percentage of revenues, it decreased 160 basis points to 10.9%.Operating profit rose 7% year over year to $1.66 billion. The operating margin was 35.1%, which contracted 240 bps from the prior-year quarter’s number.TXN’s Balance Sheet & Cash FlowAs of Sept. 30, 2025, the cash and short-term investment balance was $5.19 billion, down from $5.36 billion as of June 30, 2025.At the end of the reported quarter, TXN’s long-term debt was $13.55 billion, down from $14.04 billion in the previous quarter.Texas Instruments generated an operating cash flow of approximately $2.19 billion in the third quarter. During the third quarter, it repurchased stocks worth $119 million and paid $1.24 billion in dividends.In the first three quarters of 2025, the company generated an operating cash flow of $4.89 billion and returned approximately $4.78 billion through share repurchases and dividend payments.TXN Initiates Guidance for Q4 2025For the fourth quarter of 2025, TXN expects revenues between $4.22 billion and $4.58 billion.The company expects earnings per share between $1.13 and $1.39.The company expects the effective tax rate to be approximately 13-14%.How Have Estimates Been Moving Since Then?Since the earnings release, investors have witnessed a downward trend in fresh estimates.The consensus estimate has shifted -8.54% due to these changes.VGM ScoresAt this time, Texas Instruments has a average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a score of D on the value side, putting it in the bottom 40% for value investors.Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Texas Instruments has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Texas Instruments Incorporated (TXN): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks