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TXN

Texas Instruments NasdaqGS:TXN Stock Report

Last Price

US$182.06

Market Cap

US$166.3b

7D

-1.5%

1Y

-3.1%

Updated

11 Aug, 2022

Data

Company Financials +
TXN fundamental analysis
Snowflake Score
Valuation3/6
Future Growth1/6
Past Performance4/6
Financial Health5/6
Dividends5/6

TXN Stock Overview

Texas Instruments Incorporated designs, manufactures, and sells semiconductors to electronics designers and manufacturers worldwide.

Texas Instruments Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Texas Instruments
Historical stock prices
Current Share PriceUS$182.06
52 Week HighUS$202.26
52 Week LowUS$144.46
Beta1.01
1 Month Change17.87%
3 Month Change7.26%
1 Year Change-3.09%
3 Year Change51.91%
5 Year Change127.15%
Change since IPO7,590.98%

Recent News & Updates

Aug 08
Texas Instruments (NASDAQ:TXN) Posted Healthy Earnings But There Are Some Other Factors To Be Aware Of

Texas Instruments (NASDAQ:TXN) Posted Healthy Earnings But There Are Some Other Factors To Be Aware Of

Texas Instruments Incorporated's ( NASDAQ:TXN ) robust earnings report didn't manage to move the market for its stock...

Aug 05

Texas Instruments: Strong Quarterly Results In The Light Of A Solid Long-Term Strategy

Texas Instruments share price has remained resilient through the devastating equity market downturn. Although cost increases are to be expected, the company has one of the strongest and most profitable business models. The ambitious expansion strategy will continue to put pressure on free cash flow but is ultimately very good news for long-term shareholders. Equity investments in the semiconductors space have been a total disaster in recent months as expectations of a recession materialized and monetary tightening took its toll on high growth and momentum stocks. That is why the high-flyers, such as AMD (AMD) and Nvidia (NVDA) were hit the hardest while at the same time even value plays like Intel (INTC) were not spared (see graph below). TXN Total Return Level data by YCharts However, back in November 2021 (the starting date of the graph above), I showed why remaining focused on a long-term strategy could be a major competitive advantage in an industry obsessed with quarterly results. More specifically, Texas Instruments (TXN) had all of the signs of an attractive long-term investment, even as risks in the semiconductors were mounting. That is why a negative 3% total return during the past nine months is spectacular, considering how other companies in the sector and the equity market as a whole performed during the same period. Most recent results were also a testament that Texas Instruments' strategy is working and showed that the company is moving in the right direction. These quarterly results, however, should be reviewed with the long-term strategy in mind, or otherwise, they could easily lead to wrong conclusions. Performance During Cycle Peaks For anyone who judges equity investments based on their short-term results, the most recent quarter of TXN would have been a surprise. Such an investor would most likely suddenly turn extremely bullish on the company or would ascribe the performance to luck and transitional outside factors. Seeking Alpha Indeed, as all other peers in the sector and especially those in the analog integrated circuits market, Texas Instruments is largely riding the wave of robust semiconductors demand from a number of large markets. These industry tailwinds are what usually make short-term performance of high-quality businesses indistinguishable from that of other peers (see below). TXN data by YCharts Over longer periods of time, however, companies with strong competitive advantages, well-thought-out long-term strategies and competent management are almost always a better choice. TXN data by YCharts The overall industry tailwinds remained strong during the first half of 2022, with TXN Q2 results showing strong growth across all markets, except personal electronics. The industrial market was up high-single digits and the automotive market was up more than 20%. We saw weakness throughout the quarter in personal electronics, which grew low-single digits. Next, communications equipment was up about 25%. Finally, enterprise systems was up mid-teens. Source: Texas Instruments Q2 2022 Earnings Transcript While personal electronics is a major component of the company's revenue mix, growth in all other segments was more than enough to offset the slowdown. Prepared by the author, using data from SEC Filings On a geographical basis, revenue performance was also strong across the board, with China remaining the key growth driver for TXN even as demand was impacted by lockdowns. Texas Instruments Q2 2022 10-Q SEC Filing Even though the significant exposure to China is a source of major political risk for Texas Instruments, a large proportion of these sales are for products meant for export as well as for distributors located in the country. The High Quality Business Model While quarterly revenue growth is largely driven by outside factors, TXN's major differentiating factor from its peers is the company's highly profitable business model that allows management to grow organically as opposed to costly M&A deals. As a result, TXN continues to expand its 300mm wafer capacity and thus is in a better position to retain its industry-leading margins. Texas Instruments Investor Presentation For the past year alone, TXN gross profit margin improved by as much as 240 basis points. Gross profit in the quarter was $3.6 billion or 70% of revenue. From a year ago, gross profit margin increased 240 basis points. Source: Texas Instruments Q2 2022 Earnings Transcript That is why TXN is not only one of the most profitable semiconductor companies, but contrary to its major peer - Analog Devices (ADI), has also managed to increase its gross margin since I first covered the company in November of last year. Prepared by the author, using data from Seeking Alpha High gross margin profitability also translates into high free cash flow, in spite of the fact that TXN now spends significantly higher amounts on capex in order to expand its manufacturing capacity (more on that later). Analog Devices Investor Presentation As we look at the graph above, we should not forget that Nvidia and Broadcom (AVGO) are semiconductor designers and are not as capital intensive as integrated device manufacturers like Texas Instruments. Therefore, as the latter dials up its capital expenditure in the coming years, profitability is likely to come under pressure, but this is by no means a sign of weakness. Having said all that, the market is already pricing-in some decline in TXN margins as we see from the graph below, where we plot historical gross margins on the x-axis and price-to-sales multiples on y-axis. Prepared by the author, using data from SEC Filings and Seeking Alpha Although this makes sense from a short to medium-term point of view, for long-term oriented shareholders the market is punishing TXN with a lower sales multiple due to temporary margin headwinds associated with TXN strengthening its long-term competitive positioning. The Benefits Of Conservative Capital Allocation Turning to capital allocation, again an investor with a short-term horizon could be worried that during the last quarter TXN generated roughly $1.2bn of free cash flow and paid $1.1bn in dividends and $1.2bn in share buybacks. Cash flow from operations was $1.8 billion in the quarter. Capital expenditures were $597 million in the quarter and $2.8 billion over the last 12 months. Free cash flow on a trailing 12-month basis was $5.9 billion. In the quarter, we paid $1.1 billion in dividends and repurchased $1.2 billion of our stock. Source: Texas Instruments Q2 2022 Earnings Transcript To begin with, in recent months, TXN free cash flow experienced a major headwind in the form of higher working capital requirements.

Aug 01
Shareholders Would Enjoy A Repeat Of Texas Instruments' (NASDAQ:TXN) Recent Growth In Returns

Shareholders Would Enjoy A Repeat Of Texas Instruments' (NASDAQ:TXN) Recent Growth In Returns

To find a multi-bagger stock, what are the underlying trends we should look for in a business? Firstly, we'd want to...

Jul 28

House passes CHIPS Act, sends bill to President Biden to sign into law

On Thursday, the House of Representatives passed the CHIPS Act, one day after the legislation received bipartisan support in the U.S. Senate. The legislation, which includes $52B in subsidies for domestic production and a previously reported investment tax credit for chip plants that could be worth an estimated $24B over the next decade, will now go to President Biden's desk to sign into law. In addition to aid for the semiconductor industry, the bill also authorizes $200B to boost scientific research over the next 10 years. Affected stocks: Texas Instruments (NASDAQ:TXN), Advanced Micro Devices (AMD), Intel (NASDAQ:INTC), Nvidia (NASDAQ:NVDA), Taiwan Semiconductor (NYSE:TSM), Qualcomm (QCOM), KLA Corp. (KLAC), Applied Materials (AMAT), Lam Research (LRCX) President Biden previously tweeted support for the CHIPS Act, noting that it will help America compete with China. Earlier this month, Bank of America said KLA Corp. (KLAC) was among several companies likely to benefit if the U.S. government passed stimulus for the industry. This story is developing...

Shareholder Returns

TXNUS SemiconductorUS Market
7D-1.5%-3.3%1.3%
1Y-3.1%-7.6%-11.7%

Return vs Industry: TXN exceeded the US Semiconductor industry which returned -8.1% over the past year.

Return vs Market: TXN exceeded the US Market which returned -11.6% over the past year.

Price Volatility

Is TXN's price volatile compared to industry and market?
TXN volatility
TXN Average Weekly Movement4.5%
Semiconductor Industry Average Movement8.9%
Market Average Movement7.8%
10% most volatile stocks in US Market16.9%
10% least volatile stocks in US Market3.2%

Stable Share Price: TXN is less volatile than 75% of US stocks over the past 3 months, typically moving +/- 5% a week.

Volatility Over Time: TXN's weekly volatility (5%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
193031,000Rich Templetonhttps://www.ti.com

Texas Instruments Incorporated designs, manufactures, and sells semiconductors to electronics designers and manufacturers worldwide. It operates in two segments, Analog and Embedded Processing. The Analog segment offers power products to manage power requirements in various levels using battery-management solutions, DC/DC switching regulators, AC/DC and isolated controllers and converters, power switches, linear regulators, voltage supervisors, voltage references, and lighting products.

Texas Instruments Fundamentals Summary

How do Texas Instruments's earnings and revenue compare to its market cap?
TXN fundamental statistics
Market CapUS$166.35b
Earnings (TTM)US$8.54b
Revenue (TTM)US$19.59b

19.5x

P/E Ratio

8.5x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
TXN income statement (TTM)
RevenueUS$19.59b
Cost of RevenueUS$6.02b
Gross ProfitUS$13.57b
Other ExpensesUS$5.03b
EarningsUS$8.54b

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)9.35
Gross Margin69.26%
Net Profit Margin43.59%
Debt/Equity Ratio51.4%

How did TXN perform over the long term?

See historical performance and comparison

Dividends

2.5%

Current Dividend Yield

48%

Payout Ratio
We’ve recently updated our valuation analysis.

Valuation

Is TXN undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

3/6

Valuation Score 3/6

  • Price-To-Earnings vs Peers

  • Price-To-Earnings vs Industry

  • Price-To-Earnings vs Fair Ratio

  • Below Fair Value

  • Significantly Below Fair Value

  • Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for TXN?

Other financial metrics that can be useful for relative valuation.

TXN key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue8.4x
Enterprise Value/EBITDA14.7x
PEG Ratio-4.4x

Price to Earnings Ratio vs Peers

How does TXN's PE Ratio compare to its peers?

TXN PE Ratio vs Peers
The above table shows the PE ratio for TXN vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyPEEstimated GrowthMarket Cap
Peer Average25.3x
QCOM QUALCOMM
12.9x0.3%US$166.0b
AVGO Broadcom
25.5x9.5%US$220.3b
INTC Intel
7.6x-8.6%US$146.1b
ADI Analog Devices
55.2x12.5%US$90.7b
TXN Texas Instruments
19.5x-4.4%US$166.3b

Price-To-Earnings vs Peers: TXN is good value based on its Price-To-Earnings Ratio (19.5x) compared to the peer average (25.3x).


Price to Earnings Ratio vs Industry

How does TXN's PE Ratio compare vs other companies in the US Semiconductor Industry?

Price-To-Earnings vs Industry: TXN is good value based on its Price-To-Earnings Ratio (19.5x) compared to the US Semiconductor industry average (20.4x)


Price to Earnings Ratio vs Fair Ratio

What is TXN's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

TXN PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio19.5x
Fair PE Ratio20.3x

Price-To-Earnings vs Fair Ratio: TXN is good value based on its Price-To-Earnings Ratio (19.5x) compared to the estimated Fair Price-To-Earnings Ratio (20.3x).


Share Price vs Fair Value

What is the Fair Price of TXN when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: TXN ($182.06) is trading above our estimate of fair value ($124.2)

Significantly Below Fair Value: TXN is trading above our estimate of fair value.


Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is lower than the current share price.


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Future Growth

How is Texas Instruments forecast to perform in the next 1 to 3 years based on estimates from 28 analysts?

Future Growth Score

1/6

Future Growth Score 1/6

  • Earnings vs Savings Rate

  • Earnings vs Market

  • High Growth Earnings

  • Revenue vs Market

  • High Growth Revenue

  • Future ROE


-4.4%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: TXN's earnings are forecast to decline over the next 3 years (-4.4% per year).

Earnings vs Market: TXN's earnings are forecast to decline over the next 3 years (-4.4% per year).

High Growth Earnings: TXN's earnings are forecast to decline over the next 3 years.

Revenue vs Market: TXN's revenue (1% per year) is forecast to grow slower than the US market (8% per year).

High Growth Revenue: TXN's revenue (1% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: TXN's Return on Equity is forecast to be very high in 3 years time (48.1%).


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Past Performance

How has Texas Instruments performed over the past 5 years?

Past Performance Score

4/6

Past Performance Score 4/6

  • Quality Earnings

  • Growing Profit Margin

  • Earnings Trend

  • Accelerating Growth

  • Earnings vs Industry

  • High ROE


14.5%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: TXN has a high level of non-cash earnings.

Growing Profit Margin: TXN's current net profit margins (43.6%) are higher than last year (39.9%).


Past Earnings Growth Analysis

Earnings Trend: TXN's earnings have grown by 14.5% per year over the past 5 years.

Accelerating Growth: TXN's earnings growth over the past year (27.5%) exceeds its 5-year average (14.5% per year).

Earnings vs Industry: TXN earnings growth over the past year (27.5%) underperformed the Semiconductor industry 52.7%.


Return on Equity

High ROE: TXN's Return on Equity (60.9%) is considered outstanding.


Discover strong past performing companies

Financial Health

How is Texas Instruments's financial position?

Financial Health Score

5/6

Financial Health Score 5/6

  • Short Term Liabilities

  • Long Term Liabilities

  • Debt Level

  • Reducing Debt

  • Debt Coverage

  • Interest Coverage

Financial Position Analysis

Short Term Liabilities: TXN's short term assets ($13.0B) exceed its short term liabilities ($2.6B).

Long Term Liabilities: TXN's short term assets ($13.0B) exceed its long term liabilities ($8.1B).


Debt to Equity History and Analysis

Debt Level: TXN has more cash than its total debt.

Reducing Debt: TXN's debt to equity ratio has increased from 33.5% to 51.4% over the past 5 years.

Debt Coverage: TXN's debt is well covered by operating cash flow (120.1%).

Interest Coverage: TXN's interest payments on its debt are well covered by EBIT (52.7x coverage).


Balance Sheet


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Dividend

What is Texas Instruments's current dividend yield, its reliability and sustainability?

Dividend Score

5/6

Dividend Score 5/6

  • Notable Dividend

  • High Dividend

  • Stable Dividend

  • Growing Dividend

  • Earnings Coverage

  • Cash Flow Coverage


2.53%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: TXN's dividend (2.53%) is higher than the bottom 25% of dividend payers in the US market (1.5%).

High Dividend: TXN's dividend (2.53%) is low compared to the top 25% of dividend payers in the US market (4.05%).


Stability and Growth of Payments

Stable Dividend: TXN's dividends per share have been stable in the past 10 years.

Growing Dividend: TXN's dividend payments have increased over the past 10 years.


Earnings Payout to Shareholders

Earnings Coverage: With its reasonably low payout ratio (48.3%), TXN's dividend payments are well covered by earnings.


Cash Payout to Shareholders

Cash Flow Coverage: With its reasonable cash payout ratio (71.4%), TXN's dividend payments are covered by cash flows.


Discover strong dividend paying companies

Management

How experienced are the management team and are they aligned to shareholders interests?

4.6yrs

Average management tenure


CEO

Rich Templeton (63 yo)

4.08yrs

Tenure

US$19,195,411

Compensation

Mr. Richard K. Templeton, also known as Rich, serves as the Chief Executive Officer and President of Texas Instruments Inc. since July 17, 2018. Mr. Templeton joined Texas Instruments Inc. in 1980 in the S...


CEO Compensation Analysis

Compensation vs Market: Rich's total compensation ($USD19.20M) is above average for companies of similar size in the US market ($USD12.88M).

Compensation vs Earnings: Rich's compensation has been consistent with company performance over the past year.


Leadership Team

Experienced Management: TXN's management team is considered experienced (4.6 years average tenure).


Board Members

Experienced Board: TXN's board of directors are considered experienced (8 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: TXN insiders have only sold shares in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Texas Instruments Incorporated's employee growth, exchange listings and data sources


Key Information

  • Name: Texas Instruments Incorporated
  • Ticker: TXN
  • Exchange: NasdaqGS
  • Founded: 1930
  • Industry: Semiconductors
  • Sector: Semiconductors
  • Implied Market Cap: US$166.350b
  • Shares outstanding: 913.71m
  • Website: https://www.ti.com

Number of Employees


Location

  • Texas Instruments Incorporated
  • 12500 TI Boulevard
  • Dallas
  • Texas
  • 75243
  • United States

Listings


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2022/08/11 00:00
End of Day Share Price2022/08/11 00:00
Earnings2022/06/30
Annual Earnings2021/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.