Texas Instruments Incorporated Stock Analysis
Texas Instruments Incorporated Shares. Texas Instruments Incorporated is a company established in 1938 that specializes in the design and manufacture of semiconductors. They sell their products to electronics designers and manufacturers worldwide. The company has design, manufacturing, or sales operations in more than 30 countries.
In 1930, starting with vacuum tubes and going through the transistor revolution, finally arrived at integrated circuits. Semiconductor technologies of each generation became more reliable, affordable, and energy-efficient, catering to an increasing number of customers and markets.
One of its strategic goals, the company considers increasing the Free Cash Flow per share and pleasing investors with growing dividends and Share Buybacks. Long-term investors will receive significant returns from it.
Semiconductors are electronic components that serve as building materials for modern electronic systems and devices. They are commonly known as „chips” and combine multiple transistors to form an entire electronic circuit. Such chips perform a variety of different functions, such as signal conversion and amplification, interfacing with other devices, energy management and distribution, data processing, noise suppression, and signal resolution enhancement.
The main and most developed sectors of activity are Analog Products (Analog) and Embedded Processing. Income distribution by sectors:
Finances
Last year, the revenue stream decreased by -12.53%. Average annual income growth also decreased to 7.50%. Gross margin as an electronics manufacturing company remained very high. The Net Yield indicator are also high, although it have decreased to 37.15%. 10-year average annual EPS growth is 14%, and 5-year – 14.39%.
The yield of Retained earnings is equal to 18.64%, its average annual growth rate is 6.38%. The 10-year average annual Return on Equity (ROAE) is 47.53% – slightly increased, apparently due to the purchase of Own shares.
Of course, the company needs a lot of funds to develop its activities, especially for research and development. Even with positive Working Capital, the company is heavily indebted. The share of Total liabilities in Equity is 91.44%. Only 0.61 years would be enough to cover Long-term debts with the Net profit of 2023. 1 dollar invested in IMT earned as much as 3.37 dollar EPS.
Unfortunately, FCF per share fell several times last year. However, investors in the market believe in the company and believe that such a fall is an exception to the rule and at the end of 2023 P/FCF was $116 (2022 – $26). The average annual growth of the Book value of the share is 6.63%.
The F_SCORE result is just 3. This result is obviously due to last year’s results. We really hope that we will not see such indicators next year.
If the company’s owners wanted to sell the company and invest the money in US 10-year bonds and get the return they received in 2023, they would have to sell the shares at $165 (the share price was $171 at the time of writing). In terms of fixed income, the company is properly valued in the market. At the time of writing, our Initial investment ratio is 6.00%. This is a very good prospect.
The result of the investment evaluation:
Shares of Texas Instruments Incorporated
The company’s shares are listed on the NASDAQ stock exchange. The ticker is TXN. The standard deviation of the share price is 20.10% and beta is 1.03. This is a relatively safe share in relation to the market as a whole. It can play a stabilizing role in the portfolio. Equity risk premium is 1.72% (at the time of writing), PEG – 1.16.
In 2020, the company returned almost 75% of its net profit to shareholders through dividends and repurchased shares. The 10-year average annual dividend growth is as much as 16.72%. The dividend yield at the time of writing is as high as 2.86%. It is safe to say that this action generates solid cash flows.
The GRAPES- estimated price outlook is $374, which would yield almost 17% average annual growth. The perspective of the price calculated by our method is almost identical:
Third Party Ratings and Forecasts
Artificial Intelligence:
According to analysts’ forecasts, Texas Instruments’ stock price should fluctuate slightly in the future. The average annual price forecast is $173.89 , with a possible high of $210.00 and a possible low of $137.00 . This shows that while there is some optimism for TXN stock, the market is also taking into account potential risks and uncertainties.
Analysts have left a „Hold” recommendation on the stock, which means they believe the stock is relatively fairly valued in the current market. However, due to fluctuations in the technology sector and economic trends, forecasts are subject to change.
So if TXNI were a cocktail, it would be the Long Island Iced Tea, a complex but reliable choice. As for the forecast, the markets are like the weather in Lithuania – you can expect sunshine, but always have an umbrella handy!
Tradingview Consensus:
Price chart
Conclusions
The company’s performance last year was somewhat disappointing. But we are in no hurry to dramatize them. Dramatism except for that and only for those who did not manage to buy shares of this company with discounts when they were available last year. Now, and we really hope for it, the discounts will have to wait.
And it should be noted that the price forecasts already indicate a more moderate and realistic price growth in perspective. Therefore, we buy and fill the portfolio, especially through various corrections and monitor performance.