Texas Instruments (TXN) reported second-quarter results after Wednesday's close, and on paper, they looked great. Revenue came in at $5.46 billion, beating the $5.25 billion analysts were looking for. Earnings per share hit $2.14, topping the $1.92 consensus. But the stock still slipped 3.45% in after-hours trading, settling around $284.04.
Why the disconnect? Sometimes a good quarter isn't enough when a stock has already run up 65% year-to-date. Investors may have been looking for a reason to take profits, and even a strong beat-and-raise quarter gave them one.
Revenue was up 23% year-over-year, with growth across industrial, data center, and automotive markets. The company generated $8.7 billion in cash from operations over the trailing twelve months and $6.5 billion in free cash flow. CEO Haviv Ilan highlighted the strength of the business model, saying, "Our cash flow from operations of $8.7 billion for the trailing 12 months again underscored the strength of our business model, the quality of our product portfolio and the benefit of 300mm production." Texas Instruments ended the quarter with about $3.66 billion in cash and equivalents.
Looking ahead, the company guided for third-quarter revenue between $5.65 billion and $6.15 billion, above the $5.61 billion estimate. Earnings are expected to land between $2.23 and $2.57 per share, also ahead of the $2.15 consensus. That's a solid outlook, but the market's initial reaction suggests some traders were hoping for even more.
Executives were discussing the quarter on an earnings call starting at 4:30 p.m. ET. The after-hours dip might reverse if the call provides additional color that reassures investors. For now, TXN is a reminder that even great numbers can get a cool reception when expectations are already sky-high.
