TEXAS INSTRUMENTS INC (TXN) Stock Fundamental Analysis
NASDAQ:TXN - Nasdaq - US8825081040 - Common Stock - Currency: USD
Taking everything into account, TXN scores 6 out of 10 in our fundamental rating. TXN was compared to 109 industry peers in the Semiconductors & Semiconductor Equipment industry. TXN scores excellent on profitability, but there are some minor concerns on its financial health. TXN is valied quite expensively at the moment, while it does show a decent growth rate. Finally TXN also has an excellent dividend rating. This makes TXN very considerable for dividend investing!
1. Profitability
1.1 Basic Checks
TXN had positive earnings in the past year.
TXN had a positive operating cash flow in the past year.
Each year in the past 5 years TXN has been profitable.
TXN had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
The Return On Assets of TXN (13.44%) is better than 85.32% of its industry peers.
TXN has a better Return On Equity (28.24%) than 89.91% of its industry peers.
TXN has a Return On Invested Capital of 14.73%. This is amongst the best in the industry. TXN outperforms 88.99% of its industry peers.
TXN had an Average Return On Invested Capital over the past 3 years of 24.88%. This is significantly above the industry average of 11.16%.
The 3 year average ROIC (24.88%) for TXN is well above the current ROIC(14.73%). The reason for the recent decline needs to be investigated.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 13.44% | ||
| ROE | 28.24% | ||
| ROIC | 14.73% |
ROA(3y)21.83%
ROA(5y)25.12%
ROE(3y)42.11%
ROE(5y)48.99%
ROIC(3y)24.88%
ROIC(5y)28.23%
1.3 Margins
TXN has a better Profit Margin (30.52%) than 91.74% of its industry peers.
In the last couple of years the Profit Margin of TXN has declined.
TXN has a Operating Margin of 34.15%. This is amongst the best in the industry. TXN outperforms 94.50% of its industry peers.
In the last couple of years the Operating Margin of TXN has declined.
TXN's Gross Margin of 58.14% is amongst the best of the industry. TXN outperforms 84.40% of its industry peers.
In the last couple of years the Gross Margin of TXN has declined.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 34.15% | ||
| PM (TTM) | 30.52% | ||
| GM | 58.14% |
OM growth 3Y-11.42%
OM growth 5Y-2.89%
PM growth 3Y-10.21%
PM growth 5Y-2.51%
GM growth 3Y-4.84%
GM growth 5Y-1.81%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so TXN is creating value.
TXN has more shares outstanding than it did 1 year ago.
Compared to 5 years ago, TXN has less shares outstanding
TXN has a worse debt/assets ratio than last year.
2.2 Solvency
TXN has an Altman-Z score of 7.74. This indicates that TXN is financially healthy and has little risk of bankruptcy at the moment.
TXN's Altman-Z score of 7.74 is fine compared to the rest of the industry. TXN outperforms 78.90% of its industry peers.
TXN has a debt to FCF ratio of 9.08. This is a negative value and a sign of low solvency as TXN would need 9.08 years to pay back of all of its debts.
Looking at the Debt to FCF ratio, with a value of 9.08, TXN is in line with its industry, outperforming 55.96% of the companies in the same industry.
A Debt/Equity ratio of 0.76 indicates that TXN is somewhat dependend on debt financing.
TXN has a Debt to Equity ratio of 0.76. This is amonst the worse of the industry: TXN underperforms 80.73% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.76 | ||
| Debt/FCF | 9.08 | ||
| Altman-Z | 7.74 |
ROIC/WACC1.35
WACC10.95%
2.3 Liquidity
TXN has a Current Ratio of 4.12. This indicates that TXN is financially healthy and has no problem in meeting its short term obligations.
TXN has a Current ratio of 4.12. This is in the better half of the industry: TXN outperforms 67.89% of its industry peers.
TXN has a Quick Ratio of 2.88. This indicates that TXN is financially healthy and has no problem in meeting its short term obligations.
TXN has a Quick ratio of 2.88. This is in the better half of the industry: TXN outperforms 60.55% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 4.12 | ||
| Quick Ratio | 2.88 |
3. Growth
3.1 Past
The earnings per share for TXN have decreased strongly by -26.49% in the last year.
The Revenue for TXN has decreased by -10.72% in the past year. This is quite bad
Measured over the past years, TXN shows a small growth in Revenue. The Revenue has been growing by 1.69% on average per year.
EPS 1Y (TTM)-26.49%
EPS 3Y-14.28%
EPS 5Y0%
EPS Q2Q%-12.75%
Revenue 1Y (TTM)-10.72%
Revenue growth 3Y-5.17%
Revenue growth 5Y1.69%
Sales Q2Q%-1.72%
3.2 Future
TXN is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 18.55% yearly.
Based on estimates for the next years, TXN will show a quite strong growth in Revenue. The Revenue will grow by 10.68% on average per year.
EPS Next Y2.88%
EPS Next 2Y15.07%
EPS Next 3Y16.07%
EPS Next 5Y18.55%
Revenue Next Year9.93%
Revenue Next 2Y11.51%
Revenue Next 3Y11.14%
Revenue Next 5Y10.68%
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
A Price/Earnings ratio of 28.60 indicates a quite expensive valuation of TXN.
Compared to the rest of the industry, the Price/Earnings ratio of TXN is on the same level as its industry peers.
TXN is valuated at similar levels of the S&P average when we compare the Price/Earnings ratio to 28.29, which is the current average of the S&P500 Index.
The Price/Forward Earnings ratio is 27.80, which means the current valuation is very expensive for TXN.
TXN's Price/Forward Earnings ratio is in line with the industry average.
When comparing the Price/Forward Earnings ratio of TXN to the average of the S&P500 Index (21.32), we can say TXN is valued slightly more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 28.6 | ||
| Fwd PE | 27.8 |
4.2 Price Multiples
61.47% of the companies in the same industry are more expensive than TXN, based on the Enterprise Value to EBITDA ratio.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of TXN is on the same level as its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 90.17 | ||
| EV/EBITDA | 19.75 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
The excellent profitability rating of TXN may justify a higher PE ratio.
A more expensive valuation may be justified as TXN's earnings are expected to grow with 16.07% in the coming years.
PEG (NY)9.92
PEG (5Y)N/A
EPS Next 2Y15.07%
EPS Next 3Y16.07%
5. Dividend
5.1 Amount
TXN has a Yearly Dividend Yield of 3.66%. Purely for dividend investing, there may be better candidates out there.
The stock price of TXN dropped by -22.86% in the last 3 months. With lower prices the dividend yield is higher, but it may be a sign investors do not trust the long term dividend.
TXN's Dividend Yield is rather good when compared to the industry average which is at 2.98. TXN pays more dividend than 91.74% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.51, TXN pays a bit more dividend than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.66% |
5.2 History
The dividend of TXN is nicely growing with an annual growth rate of 10.46%!
TXN has paid a dividend for at least 10 years, which is a reliable track record.
TXN has not decreased their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)10.46%
Div Incr Years21
Div Non Decr Years26
5.3 Sustainability
100.44% of the earnings are spent on dividend by TXN. This is not a sustainable payout ratio.
TXN's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP100.44%
EPS Next 2Y15.07%
EPS Next 3Y16.07%
148.44
+1.89 (+1.29%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSemiconductors & Semiconductor Equipment
GICS IndustrySemiconductors & Semiconductor Equipment
Earnings (Last)
Earnings (Next)
Inst Owners90.44%
Inst Owner Change0.02%
Ins Owners0.23%
Ins Owner Change3.8%
Market Cap135.07B
Analysts66.67
Price Target206.54 (39.14%)
Short Float %1.97%
Short Ratio2.72
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.66% |
Yearly Dividend5.27
Dividend Growth(5Y)10.46%
DP100.44%
Div Incr Years21
Div Non Decr Years26
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)6.33%
Min EPS beat(2)5.79%
Max EPS beat(2)6.88%
EPS beat(4)4
Avg EPS beat(4)6.84%
Min EPS beat(4)3.53%
Max EPS beat(4)11.19%
EPS beat(8)8
Avg EPS beat(8)4.62%
EPS beat(12)12
Avg EPS beat(12)5.52%
EPS beat(16)15
Avg EPS beat(16)6.77%
Revenue beat(2)1
Avg Revenue beat(2)1.07%
Min Revenue beat(2)-0.24%
Max Revenue beat(2)2.38%
Revenue beat(4)2
Avg Revenue beat(4)0.38%
Min Revenue beat(4)-1.01%
Max Revenue beat(4)2.38%
Revenue beat(8)3
Avg Revenue beat(8)-0.07%
Revenue beat(12)7
Avg Revenue beat(12)1.23%
Revenue beat(16)10
Avg Revenue beat(16)2.01%
PT rev (1m)-0.27%
PT rev (3m)-2.2%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-10.27%
EPS NY rev (1m)-2.83%
EPS NY rev (3m)-9.76%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)0.77%
Revenue NY rev (1m)-0.38%
Revenue NY rev (3m)-0.72%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 28.6 | ||
| Fwd PE | 27.8 | ||
| P/S | 8.64 | ||
| P/FCF | 90.17 | ||
| P/OCF | 21.38 | ||
| P/B | 7.99 | ||
| P/tB | 11 | ||
| EV/EBITDA | 19.75 |
EPS(TTM)5.19
EY3.5%
EPS(NY)5.34
Fwd EY3.6%
FCF(TTM)1.65
FCFY1.11%
OCF(TTM)6.94
OCFY4.68%
SpS17.19
BVpS18.58
TBVpS13.5
PEG (NY)9.92
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 13.44% | ||
| ROE | 28.24% | ||
| ROCE | 16.76% | ||
| ROIC | 14.73% | ||
| ROICexc | 19.33% | ||
| ROICexgc | 23.87% | ||
| OM | 34.15% | ||
| PM (TTM) | 30.52% | ||
| GM | 58.14% | ||
| FCFM | 9.58% |
ROA(3y)21.83%
ROA(5y)25.12%
ROE(3y)42.11%
ROE(5y)48.99%
ROIC(3y)24.88%
ROIC(5y)28.23%
ROICexc(3y)37.04%
ROICexc(5y)45.04%
ROICexgc(3y)50.11%
ROICexgc(5y)68.14%
ROCE(3y)28.31%
ROCE(5y)32.12%
ROICexcg growth 3Y-37.97%
ROICexcg growth 5Y-22.81%
ROICexc growth 3Y-32.93%
ROICexc growth 5Y-16.48%
OM growth 3Y-11.42%
OM growth 5Y-2.89%
PM growth 3Y-10.21%
PM growth 5Y-2.51%
GM growth 3Y-4.84%
GM growth 5Y-1.81%
F-Score4
Asset Turnover0.44
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.76 | ||
| Debt/FCF | 9.08 | ||
| Debt/EBITDA | 1.86 | ||
| Cap/Depr | 305.06% | ||
| Cap/Sales | 30.82% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 91.29% | ||
| Profit Quality | 31.38% | ||
| Current Ratio | 4.12 | ||
| Quick Ratio | 2.88 | ||
| Altman-Z | 7.74 |
F-Score4
WACC10.95%
ROIC/WACC1.35
Cap/Depr(3y)333.46%
Cap/Depr(5y)264.77%
Cap/Sales(3y)24.58%
Cap/Sales(5y)18.33%
Profit Quality(3y)40.07%
Profit Quality(5y)60.03%
High Growth Momentum
Growth
EPS 1Y (TTM)-26.49%
EPS 3Y-14.28%
EPS 5Y0%
EPS Q2Q%-12.75%
EPS Next Y2.88%
EPS Next 2Y15.07%
EPS Next 3Y16.07%
EPS Next 5Y18.55%
Revenue 1Y (TTM)-10.72%
Revenue growth 3Y-5.17%
Revenue growth 5Y1.69%
Sales Q2Q%-1.72%
Revenue Next Year9.93%
Revenue Next 2Y11.51%
Revenue Next 3Y11.14%
Revenue Next 5Y10.68%
EBIT growth 1Y-27.14%
EBIT growth 3Y-16.01%
EBIT growth 5Y-1.25%
EBIT Next Year47.75%
EBIT Next 3Y27.49%
EBIT Next 5Y22.78%
FCF growth 1Y11.05%
FCF growth 3Y-38.03%
FCF growth 5Y-23.72%
OCF growth 1Y-1.59%
OCF growth 3Y-10.31%
OCF growth 5Y-1.02%