Sometimes in the stock market, missing estimates is just fine—as long as you give investors something better to look forward to. That's exactly what happened when Texas Instruments Inc. (TXN) reported fourth-quarter results Tuesday after the bell.
Texas Instruments Misses Q4 Expectations But Investors Don't Care—Here's Why
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The Q4 Numbers Come Up Short
Texas Instruments posted fourth-quarter revenue of $4.42 billion, slightly below the $4.44 billion analysts were expecting. Earnings came in at $1.27 per share, missing the consensus estimate of $1.30 per share. The company noted that earnings included a six-cent reduction per share that wasn't part of their original guidance.
But here's the thing: revenue still climbed 10% year-over-year, which isn't exactly a disaster. The semiconductor giant generated $7.2 billion in cash flow from operations over the trailing 12 months, with $2.9 billion in free cash flow.
"Over the past 12 months, we invested $3.9 billion in R&D and SG&A, invested $4.6 billion in capital expenditures and returned $6.5 billion to owners," the company said. Texas Instruments closed the quarter with $3.23 billion in cash and cash equivalents on hand.
The Guidance That Changed Everything
Here's where things get interesting. Texas Instruments guided for first-quarter revenue between $4.32 billion and $4.68 billion, with a midpoint above the $4.42 billion consensus estimate. Earnings guidance of $1.22 to $1.48 per share also beats expectations at the midpoint versus the $1.26 per share estimate.
That forward-looking optimism appears to be what sent shares surging in after-hours trading, up 5.17% to $206.80. The message is clear: investors care less about what just happened and more about what's coming next.
Company executives are scheduled to discuss the quarterly results in more detail on an earnings call at 4:30 p.m. ET.
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