Today we're going to take a closer look at large-cap Technology company Texas Instruments, whose shares are currently trading at $169.46. We've been asking ourselves whether the company is under or over valued at today's prices... let's perform a brief value analysis to find out!
A Lower P/E Ratio Than Its Sector Average but Trades Above Its Graham Number:
Texas Instruments Incorporated designs, manufactures, and sells semiconductors to electronics designers and manufacturers in the United States and internationally. The company belongs to the Technology sector, which has an average price to earnings (P/E) ratio of 35.0 and an average price to book (P/B) ratio of 7.92. In contrast, Texas Instruments has a trailing 12 month P/E ratio of 22.0 and a P/B ratio of 9.25.
Texas Instruments's PEG ratio is 2.4, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.
Growing Revenues With Increasing Reinvestment in the Business:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $15,784 | $14,383 | $14,461 | $18,344 | $20,028 | $18,112 |
| Revenue Growth | n/a | -8.88% | 0.54% | 26.85% | 9.18% | -9.57% |
| Operating Margins | 43% | 40% | 42% | 49% | 51% | 44% |
| Net Margins | 35% | 35% | 39% | 42% | 44% | 39% |
| Net Income (MM) | $5,580 | $5,017 | $5,595 | $7,769 | $8,749 | $7,101 |
| Net Interest Expense (MM) | $125 | $175 | $313 | $184 | $214 | $378 |
| Depreciation & Amort. (MM) | $590 | $708 | $733 | $755 | $925 | $1,102 |
| Earnings Per Share | $5.59 | $5.24 | $5.97 | $8.26 | $9.41 | $7.710000000000001 |
| EPS Growth | n/a | -6.26% | 13.93% | 38.36% | 13.92% | -18.07% |
| Diluted Shares (MM) | 990 | 952 | 933 | 936 | 926 | 887 |
| Free Cash Flow (MM) | $6,058 | $5,802 | $5,490 | $6,294 | $5,923 | $1,648 |
| Capital Expenditures (MM) | $1,131 | $847 | $649 | $2,462 | $2,797 | $4,890 |
| Current Ratio | 3.27 | 4.13 | 4.28 | 5.33 | 4.7 | 5.69 |
| Total Debt (MM) | $5,068 | $5,803 | $6,798 | $7,741 | $8,735 | $11,222 |
| Net Debt / EBITDA | 0.36 | 0.52 | 0.55 | 0.32 | 0.51 | 0.95 |
Texas Instruments has growing revenues and increasing reinvestment in the business and strong margins with a stable trend. Additionally, the company's financial statements display low leverage and positive EPS growth. However, the firm has irregular cash flows.
