| Snowflake Score | |
|---|---|
| Valuation | 3/6 |
| Future Growth | 1/6 |
| Past Performance | 4/6 |
| Financial Health | 5/6 |
| Dividends | 5/6 |
TXN Stock Overview
Texas Instruments Incorporated designs, manufactures, and sells semiconductors to electronics designers and manufacturers worldwide.
Texas Instruments Competitors
Price History & Performance
| Historical stock prices | |
|---|---|
| Current Share Price | US$178.46 |
| 52 Week High | US$202.26 |
| 52 Week Low | US$144.46 |
| Beta | 1.01 |
| 1 Month Change | 8.39% |
| 3 Month Change | 5.09% |
| 1 Year Change | -3.56% |
| 3 Year Change | 42.53% |
| 5 Year Change | 119.64% |
| Change since IPO | 7,438.90% |
Recent News & Updates
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...
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.
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...
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
| TXN | US Semiconductor | US Market | |
|---|---|---|---|
| 7D | -2.0% | 2.4% | 1.4% |
| 1Y | -3.6% | -3.2% | -8.4% |
Return vs Industry: TXN matched the US Semiconductor industry which returned -4.2% over the past year.
Return vs Market: TXN exceeded the US Market which returned -9% over the past year.
Price Volatility
| TXN volatility | |
|---|---|
| TXN Average Weekly Movement | 4.4% |
| Semiconductor Industry Average Movement | 8.6% |
| Market Average Movement | 7.6% |
| 10% most volatile stocks in US Market | 17.1% |
| 10% least volatile stocks in US Market | 3.1% |
Stable Share Price: TXN is less volatile than 75% of US stocks over the past 3 months, typically moving +/- 4% a week.
Volatility Over Time: TXN's weekly volatility (4%) has been stable over the past year.
About the Company
| Founded | Employees | CEO | Website |
|---|---|---|---|
| 1930 | 31,000 | Rich Templeton | https://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
| TXN fundamental statistics | |
|---|---|
| Market Cap | US$163.06b |
| Earnings (TTM) | US$8.54b |
| Revenue (TTM) | US$19.59b |
19.1x
P/E Ratio8.3x
P/S RatioIs TXN overvalued?
See Fair Value and valuation analysisEarnings & Revenue
| TXN income statement (TTM) | |
|---|---|
| Revenue | US$19.59b |
| Cost of Revenue | US$6.02b |
| Gross Profit | US$13.57b |
| Other Expenses | US$5.03b |
| Earnings | US$8.54b |
Last Reported Earnings
Jun 30, 2022
Next Earnings Date
n/a
| Earnings per share (EPS) | 9.35 |
| Gross Margin | 69.26% |
| Net Profit Margin | 43.59% |
| Debt/Equity Ratio | 51.4% |
How did TXN perform over the long term?
See historical performance and comparisonDividends
2.6%
Current Dividend Yield48%
Payout RatioValuation
Is TXN undervalued compared to its fair value, analyst forecasts and its price relative to the market?
Valuation Score
3/6Valuation 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.
| What is TXN's n/a Ratio? | |
|---|---|
| n/a Ratio | 0x |
| n/a | n/a |
| Market Cap | US$163.06b |
| Key Statistics | |
|---|---|
| Enterprise Value/Revenue | 8.3x |
| Enterprise Value/EBITDA | 14.4x |
| PEG Ratio | -4.3x |
Price to Earnings Ratio vs Peers
How does TXN's PE Ratio compare to its peers?
| TXN PE Ratio vs Peers |
|---|
| Company | PE | Estimated Growth | Market Cap |
|---|---|---|---|
| Peer Average | 23.4x | ||
QCOM QUALCOMM | 13.2x | 0.5% | US$170.0b |
AVGO Broadcom | 26.1x | 9.5% | US$225.5b |
INTC Intel | 7.8x | 2.2% | US$148.6b |
ADI Analog Devices | 46.3x | 12.5% | US$87.5b |
TXN Texas Instruments | 19.1x | -4.4% | US$163.1b |
Price-To-Earnings vs Peers: TXN is good value based on its Price-To-Earnings Ratio (19.1x) compared to the peer average (23.4x).
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 (19.1x) compared to the US Semiconductor industry average (19.3x)
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.
| Fair Ratio | |
|---|---|
| Current PE Ratio | 19.1x |
| Fair PE Ratio | 20.3x |
Price-To-Earnings vs Fair Ratio: TXN is good value based on its Price-To-Earnings Ratio (19.1x) 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 ($178.46) is trading above our estimate of fair value ($124)
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 less than 20% higher 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
1/6Future 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 (7.8% 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
4/6Past 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 56.1%.
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
5/6Financial 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
5/6Dividend Score 5/6
Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Cash Flow Coverage
2.58%
Current Dividend Yield
Dividend Yield vs Market
Notable Dividend: TXN's dividend (2.58%) is higher than the bottom 25% of dividend payers in the US market (1.48%).
High Dividend: TXN's dividend (2.58%) is low compared to the top 25% of dividend payers in the US market (3.99%).
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$163.060b
- 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
| Data | Last Updated (UTC time) |
|---|---|
| Company Analysis | 2022/08/18 00:00 |
| End of Day Share Price | 2022/08/18 00:00 |
| Earnings | 2022/06/30 |
| Annual Earnings | 2021/12/31 |
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.