What Should You Know About Texas Instruments Incorporated’s (NASDAQ:TXN) Future?

Based on Texas Instruments Incorporated’s (NASDAQ:TXN) earnings update in December 2018, analyst consensus outlook appear cautiously subdued, with profits predicted to rise by -10% next year relative to the higher past 5-year average growth rate of 16%. By 2020, we can expect Texas Instruments’s bottom line to reach US$5.0b, a jump from the current trailing-twelve-month of US$5.5b. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Texas Instruments in the longer term. For those interested in more of an analysis of the company, you can research its fundamentals here.

View our latest analysis for Texas Instruments

Exciting times ahead?

Over the next three years, it seems the consensus view of the 28 analysts covering TXN is skewed towards the positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. I’ve plotted out each year’s earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of TXN’s earnings growth over these next few years.

NasdaqGS:TXN Past and Future Earnings, April 10th 2019
NasdaqGS:TXN Past and Future Earnings, April 10th 2019

By 2022, TXN’s earnings should reach US$5.7b, from current levels of US$5.5b, resulting in an annual growth rate of 1.1%. EPS reaches $6.19 in the final year of forecast compared to the current $5.71 EPS today. In 2022, TXN’s profit margin will have expanded from 35% to 35%.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For Texas Instruments, there are three relevant factors you should further research:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is Texas Instruments worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Texas Instruments is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Texas Instruments? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.