What Our Analysts Know About Texas Instruments

Texas Instruments logged a 0.1% change during today's afternoon session, and is now trading at a price of $182.26 per share. The S&P 500 index moved 1.4% and the Nasdaq posted a 3.2% change.

Texas Instruments shares moved 3.7% over the last 52 weeks, with a high of $191.34 and a low of $144.46. During this time, the stock outperformed the S&P 500 index by 11.7%. As of January 2022, the company's 50-day average price is $173.0. Texas Instruments Incorporated designs, manufactures, and sells semiconductors to electronics designers and manufacturers worldwide. The large-cap Technology company is based in Dallas, TX. Texas Instruments has returned a 2.6% dividend yield over the last 12 months.

Exceptional EPS Growth with Low Leverage Levels:

2019-12-31 2020-12-31 2021-12-31 2022-12-31
Revenue (MM) $14,383 $14,461 $18,344 $20,028
Revenue Growth n/a 0.54% 26.85% 9.18%
Gross Margins 63.7% 64.1% 67.5% 68.8%
Gross Margins Growth n/a 0.63% 5.3% 1.93%
Operating Margins 41.5% 42.3% 49.9% 51.9%
Operating Margins Growth n/a 1.93% 17.97% 4.01%
Earnings Per Share $5.24 $5.97 $8.26 $9.41
EPS Growth n/a 13.93% 38.36% 13.92%
Free Cash Flow (MM) $5,802 $5,490 $6,294 $5,923
FCF Growth n/a -5.38% 14.64% -5.89%
Capital Expenditures (MM) -$847 -$649 -$2,462 -$2,797
Net Debt / EBITDA 0.47 0.5 0.3 0.5

Texas Instruments Is Reasonably Priced:

Compared to the Technology sector's average of 26.5, Texas Instruments has a trailing twelve month P/E ratio of 19.4 and, according to its EPS guidance of 8.47, an expected P/E ratio of 21.5. Texas Instruments's PEG ratio is 1.38 based on its 14.0% annual average growth rate of historical and projected earnings per share. However, we believe that it is more prudent to calculate the PEG ratio using the broader market's 5-year expected EPS growth rate of 13.05%, because the growth rate implied by Texas Instruments's past and expected EPS is probably not sustainable. This more prudent approach shows a PEG ratio of 1.48, which implies that the company's shares might in fact be fairly valued.

Texas Instruments's P/B ratio is 11.3 compared to its sector average of 5.57. The company is likely overvalued in terms of its equity. The company's shares are currently trading 256.5% above their fair value as expressed by Benjamin Graham's formula:

√(22.5 * 4-year average EPS * book value per share) = √(22.5 * 7.22 * 16.089) = $51.12

Texas Instruments's elevated P/B ratio notwithstanding, the company's strong cash flows, decent earnings multiple, and healthy debt levels factor towards it being fairly valued.

Texas Instruments Is the Subject of Mixed Market Indicators:

29 analysts are following Texas Instruments and have set target prices ranging from $127 to $230 per share. On average, they have given the company a rating of hold. At the current price of $182.26, TXN is trading -0.22% away from its average analyst target price of $182.66 per share, implying an analyst consensus of some upside potential for the stock.

The company has an average amount of shares sold short since 2.2% of the company's shares are tied to short positions. Institutions own 88.4% of Texas Instruments's shares, while the insider ownership rate stands at 0.21%. The biggest shareholder is the Vanguard Group, Inc. with a 10% stake in the company worth approximately $15,897,080,329.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.