It's been a great morning session for Texas Instruments investors, who saw their shares rise 4.0% to a price of $159.4 per share. At these higher prices, is the company still fairly valued? If you are thinking about investing, make sure to check the company's fundamentals before making a decision.
a Very Low P/E Ratio but Priced Beyond Its Margin of Safety:
Texas Instruments Incorporated designs, manufactures, and sells semiconductors to electronics designers and manufacturers in the United States, China, rest of Asia, Europe, Middle East, Africa, Japan, and internationally. The company belongs to the Technology sector, which has an average price to earnings (P/E) ratio of 30.44 and an average price to book (P/B) ratio of 4.19. In contrast, Texas Instruments has a trailing 12 month P/E ratio of 29.1 and a P/B ratio of 8.71.
Texas Instruments has moved -21.5% over the last year compared to 10.3% for the S&P 500 — a difference of -31.7%. Texas Instruments has a 52 week high of $221.69 and a 52 week low of $139.95.
Wider Gross Margins Than the Industry Average of 42.19%:
| 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $14,383 | $14,461 | $18,344 | $20,028 | $17,519 | $15,641 |
| Gross Margins | 64% | 64% | 67% | 69% | 63% | 57% |
| Net Margins | 35% | 39% | 42% | 44% | 37% | 31% |
| Net Income (M) | $5,017 | $5,595 | $7,769 | $8,749 | $6,510 | $4,799 |
| Net Interest Expense (M) | $170 | $190 | $184 | $214 | $353 | $508 |
| Depreciation & Amort. (M) | $708 | $733 | $755 | $925 | $1,175 | $1,508 |
| Diluted Shares (M) | 952 | 933 | 936 | 926 | 916 | 919 |
| Earnings Per Share | $5.24 | $5.97 | $8.26 | $9.41 | $7.07 | $5.2 |
| EPS Growth | n/a | 13.93% | 38.36% | 13.92% | -24.87% | -26.45% |
| Avg. Price | $103.98 | $122.33 | $176.63 | $165.7 | $170.46 | $159.4 |
| P/E Ratio | 19.51 | 20.22 | 21.08 | 17.42 | 23.91 | 30.42 |
| Free Cash Flow (M) | $5,802 | $5,490 | $6,294 | $5,923 | $1,349 | $1,498 |
| CAPEX (M) | $847 | $649 | $2,462 | $2,797 | $5,071 | $4,820 |
| EV / EBITDA | 15.78 | 17.88 | 17.1 | 14.39 | 19.2 | 22.38 |
| Total Debt (M) | $6,303 | $7,348 | $8,241 | $9,235 | $11,822 | $14,346 |
| Net Debt / EBITDA | 0.6 | 0.64 | 0.37 | 0.56 | 1.04 | 1.6 |
| Current Ratio | 4.13 | 4.28 | 5.33 | 4.7 | 4.55 | 4.12 |
Texas Instruments has an excellent current ratio of 4.12 and slight revenue growth and increasing reinvestment in the business. Additionally, the company's financial statements display wider gross margins than its peer group and healthy leverage levels. However, the firm has positive cash flows. Finally, we note that Texas Instruments has flat EPS growth.
