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Texas Instruments (TXN)
NASDAQ:TXN
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Texas Instruments
(NASDAQ:TXN)70Outperform
Positive Factors
Financial Performance
Texas Instruments is expected to deliver best-in-class free cash flow per share and dividend growth following the heavy investment cycle.
Supply Chain Efficiency
Being nearly entirely front-end insourced offers cost and geo-dependability advantages for Texas Instruments.
Negative Factors
Inventory Challenges
Supply chain inventory levels remain at multi-year high, dismissing expectations of a quick recovery in analog.
Texas Instruments (TXN) vs. S&P 500 (SPY)
Market Cap
$177.37B
Dividend Yield2.74%
Average Volume (3M)6.96M
Price to Earnings (P/E)37.5
Beta (1Y)1.15
Revenue Growth-10.72%
EPS Growth-26.60%
CountryUS
Employees34,000
SectorTechnology
Sector Strength48
IndustrySemiconductors and Equipment
Share Statistics
EPS (TTM)5.20
Shares Outstanding910,332,950
10 Day Avg. Volume7,276,961
30 Day Avg. Volume6,958,246
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)11.34
Price to Cash Flow (P/CF)22.20
P/FCF Ratio48.30
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$208.91Price Target Upside6.82% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering22
Texas Instruments Business Overview & Revenue Model
Company DescriptionIncorporated in 1930, Texas Instruments Incorporated, a global semiconductor company, designs, manufactures and sells analog and embedded processing chips. The company operates through two segments, including Analog, and Embedded Processing. The company is headquartered in Dallas, Texas.
How the Company Makes MoneyTexas Instruments makes money primarily through the sale of its analog and embedded processing products. The company's revenue model is centered on designing and manufacturing semiconductor solutions that are integral to electronic systems and devices. Key revenue streams include analog chips, which account for a significant portion of sales due to their applications in power management, data conversion, and signal conditioning, and embedded processors, which are used in various control and processing tasks across different industries. Texas Instruments also benefits from long-standing relationships and partnerships with large-scale original equipment manufacturers (OEMs) and distributors who integrate its products into their devices and systems. Additionally, TI's focus on innovation and operational efficiency, along with its robust manufacturing capabilities, contribute to its profitability and competitive positioning in the semiconductor market.
Texas Instruments Financial Statement Overview
Summary
Texas Instruments shows strong profitability with high margins and a robust balance sheet. However, revenue has contracted, indicating challenges in growth. Despite this, the company has maintained operational efficiency and cash flow stability, though capital expenditures are high.Income Statement
Texas Instruments' TTM (Trailing-Twelve-Months) shows a gross profit margin of 58.1% and a net profit margin of 30.68%, indicating strong profitability. However, the revenue growth rate is negative at -10.73% from the previous year, mainly due to cyclical downturns in the semiconductor industry. EBIT and EBITDA margins also reflect robust operational efficiency, standing at 34.14% and 44.72% respectively. Despite the drop in revenue, the company maintains healthy profitability metrics.75
Positive
Balance Sheet
The company maintains a strong balance sheet with a debt-to-equity ratio of 0.80, reflecting manageable leverage. Return on Equity (ROE) is impressive at 28.38%, demonstrating effective use of shareholder funds. The equity ratio stands at 47.6%, indicating a balanced capital structure with a good proportion of assets financed by equity. Overall, Texas Instruments' balance sheet shows stability and effective financial management.80
Positive
Cash Flow
Cash flow analysis reveals a positive but modest free cash flow growth rate of 11.06% in the TTM. The operating cash flow to net income ratio of 1.32 indicates strong cash generation relative to reported earnings. However, the free cash flow to net income ratio is lower at 0.31, suggesting significant capital expenditures. Cash flow stability remains sound, though high capital investments could be a point of consideration.70
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 15.64B | 17.52B | 20.03B | 18.34B | 14.46B | Gross Profit |
| 9.09B | 11.02B | 13.77B | 12.38B | 9.27B | EBIT |
| 5.46B | 7.33B | 10.14B | 8.96B | 5.89B | EBITDA |
| 7.54B | 9.01B | 11.22B | 10.06B | 7.20B | Net Income Common Stockholders |
| 4.80B | 6.51B | 8.75B | 7.77B | 5.59B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 7.58B | 8.57B | 9.07B | 9.74B | 6.57B | Total Assets |
| 35.51B | 32.35B | 27.21B | 24.68B | 19.35B | Total Debt |
| 13.60B | 11.22B | 8.73B | 7.74B | 6.80B | Net Debt |
| 10.40B | 8.26B | 5.68B | 3.11B | 3.69B | Total Liabilities |
| 18.61B | 15.45B | 12.63B | 11.34B | 10.16B | Stockholders Equity |
| 16.90B | 16.90B | 14.58B | 13.33B | 9.19B |
| Cash Flow | Free Cash Flow | |||
| 1.50B | 1.35B | 5.92B | 6.29B | 5.49B | Operating Cash Flow |
| 6.32B | 6.42B | 8.72B | 8.76B | 6.14B | Investing Cash Flow |
| -3.20B | -4.36B | -3.58B | -4.09B | -922.00M | Financing Cash Flow |
| -2.88B | -2.14B | -6.72B | -3.14B | -4.55B |
Texas Instruments Technical Analysis
Positive
195.57
Price Trends
188.92
Positive
194.18
Positive
195.16
Positive
Market Momentum
2.55
Negative
55.55
Neutral
30.21
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TXN, the sentiment is Positive. The current price of 195.57 is above the 20-day moving average (MA) of 190.40, above the 50-day MA of 188.92, and above the 200-day MA of 195.16, indicating a bullish trend. The MACD of 2.55 indicates Negative momentum. The RSI at 55.55 is Neutral, neither overbought nor oversold. The STOCH value of 30.21 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TXN.
Texas Instruments Risk Analysis
Texas Instruments disclosed 18 risk factors in its most recent earnings report. Texas Instruments reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Texas Instruments Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $112.18B | 72.13 | 4.46% | 1.63% | -19.28% | -44.00% | |
70 Outperform | $177.37B | 37.50 | 28.25% | 2.74% | -10.72% | -26.60% | |
70 Outperform | $53.55B | 21.47 | 27.33% | 1.92% | -4.99% | -9.18% | |
68 Neutral | $31.27B | 102.52 | 5.12% | 3.12% | -44.31% | -86.74% | |
67 Neutral | $881.52B | 151.95 | 13.46% | 1.16% | 43.99% | -62.55% | |
67 Neutral | $18.75B | 12.25 | 17.88% | ― | -14.19% | -27.42% | |
59 Neutral | $22.39B | 11.53 | -18.05% | 2.31% | 5.00% | -25.89% |
* Technology Sector Average
Performance Comparison
TXN
Texas Instruments
195.57
28.38
16.97%
ADI
Analog Devices
229.47
40.90
21.69%
AVGO
Broadcom
191.58
58.38
43.83%
MCHP
Microchip
59.64
-26.04
-30.39%
NXPI
NXP Semiconductors
216.77
-30.29
-12.26%
ON
ON Semiconductor
46.49
-31.13
-40.11%
Texas Instruments Earnings Call Summary
Earnings Call Date: Jan 23, 2025 | % Change Since: -1.79% | Next Earnings Date: Apr 29, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed picture with notable achievements such as the growth in Analog revenue and a strong cash position. However, significant challenges were evident in the form of revenue declines, especially in the Embedded Processing segment, and decreased gross profit margins. The company is navigating a competitive environment and economic uncertainties impacting key markets like automotive and industrial.Highlights
Analog Revenue Growth
Analog revenue grew 2% year-over-year after 8 quarters of decline, signaling a positive turnaround in this segment.
Dividend Increase
Texas Instruments increased its dividend per share by 5% in the fourth quarter, marking the 21st consecutive year of dividend increases.
Strong Cash Position
The company's balance sheet remains strong with $7.6 billion of cash and short-term investments at the end of the fourth quarter.
CHIPS Act Funding
Awarded up to $1.6 billion in CHIPS Act funding to support new 300-millimeter wafer fabs, with expectations of $7.5 billion to $9.5 billion in total funding over the life of the program.
Lowlights
Revenue Decline
Overall revenue was $4 billion, a decrease of 3% sequentially and 2% from the same quarter a year ago.
Embedded Processing Decline
Embedded Processing revenue declined 18% year-over-year, showing significant weakness in this segment.
Gross Profit Margin Decrease
Gross profit margin decreased by 190 basis points due to lower revenue, higher depreciation, and reduced factory loadings.
Automotive and Industrial Declines
The automotive market was down mid-single digits, and the industrial market was down low single digits sequentially.
Increase in Inventory Levels
Inventory at the end of the quarter was $4.5 billion, up $231 million from the prior quarter, with inventory days increasing by 10 days sequentially.
Company Guidance
In the Texas Instruments (TXN) fourth quarter 2024 earnings call, executives provided a comprehensive overview of the company's financial performance and guidance for Q1 2025. The quarter saw a revenue of $4 billion, with a 3% sequential and 2% year-over-year decline. The analog segment experienced a 2% year-over-year growth after eight quarters of decline, while embedded processing declined by 18%. The industrial and automotive markets, comprising 70% of 2024 revenue, faced modest sequential declines. Gross profit amounted to $2.3 billion, representing 58% of revenue, but gross profit margin decreased by 190 basis points due to lower revenue, increased depreciation, and reduced factory loadings. Operating expenses were $937 million, up 4% year-over-year. The company returned $5.7 billion to shareholders over the past year and maintained a strong balance sheet with $7.6 billion in cash and short-term investments. Looking ahead, TXN expects Q1 2025 revenue to range between $3.74 billion and $4.06 billion, with earnings per share between $0.94 and $1.16, and an effective tax rate of about 12% for the year. The company remains focused on enhancing its competitive advantages, including manufacturing and technology, to drive long-term free cash flow per share growth.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.