Texas Instruments Inc (NASDAQ: TXN)

Sector: Technology Industry: Semiconductors CIK: 0000097476
Market Cap 172.17 Bn
P/B 10.35
P/E 34.14
P/S 9.97
ROIC (Qtr) 16.70
Div Yield % 3.64
Rev 1y % (Qtr) 14.24
Total Debt (Qtr) 14.05 Bn
Debt/Equity (Qtr) 0.84

About

Texas Instruments Incorporated (TI), a technology company with the ticker symbol TXN, operates in the highly competitive and fragmented industries of analog and embedded processing. Its main business activities involve designing, manufacturing, and selling semiconductors, which are integral to a wide range of applications, including industrial, automotive, and personal electronics. Revenue for TI is generated through the sale of its semiconductors, which are used in various products such as smartphones, laptops, and medical devices. The company's...

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Price action

Investment thesis

Bull case

  • Strong operating cash flow of 6.90B provides robust 0.49x coverage of total debt 14.05B, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 3.31B provide 6.62x coverage of short-term debt 500M, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 6.90B provides strong 16.58x coverage of stock compensation 416M, indicating sustainable incentive practices.
  • Operating cash flow of 6.90B provides exceptional 12.96x coverage of interest expenses 532M, showing strong debt service capability.
  • Strong operating cash flow of 6.90B provides 3.71x coverage of SG&A expenses 1.86B, showing efficient operational cost management.

Bear case

  • Operating cash flow of 6.90B barely covers its investment activities of (149M), with a coverage ratio of -46.29, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 6.90B provides thin coverage of dividend payments of (4.95B) with a -1.39 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Investment activities of (149M) provide weak support for R&D spending of 2.05B, which is -0.07x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Free cash flow of 2.08B provides weak coverage of capital expenditures of 4.82B, with a 0.43 ratio suggesting additional external financing needs for growth initiatives.
  • Retained earnings of 52.37B provide limited buffer against comprehensive income items of (149M), which is -351.47x, indicating elevated exposure to market risks.

Concentration Risk Benchmark Breakdown of Revenue (2024)

Segments Breakdown of Revenue (2024)

Peer comparison

Companies in the Semiconductors
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 NVDA Nvidia Corp 4,521.08 Bn 45.58 24.16 10.48 Bn
2 TSM Taiwan Semiconductor Manufacturing Co Ltd 1,648.98 Bn 31.97 13.84 31.18 Bn
3 AVGO Broadcom Inc. 1,565.97 Bn 67.71 24.51 65.14 Bn
4 MU Micron Technology Inc 366.37 Bn 30.76 8.66 12.43 Bn
5 AMD Advanced Micro Devices Inc 333.34 Bn 100.83 10.41 3.87 Bn
6 INTC Intel Corp 271.33 Bn 1,370.33 5.08 46.55 Bn
7 QCOM Qualcomm Inc/De 199.55 Bn 36.01 4.51 14.81 Bn
8 TXN Texas Instruments Inc 172.17 Bn 34.14 9.97 14.05 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 5.23 4.13
EV to Cash from Ops. EV/CFO 26.56 -370.81
EV to Debt EV to Debt 13.04 88.27
EV to EBIT EV/EBIT 29.41 -65.23
EV to EBITDA EV/EBITDA 23.47 22.97
EV to Free Cash Flow [EV/FCF] EV/FCF 88.06 -8.14
EV to Market Cap EV to Market Cap 1.06 0.80
EV to Revenue EV/Rev 10.61 20.31
Price to Book Value [P/B] P/B 10.35 5.16
Price to Earnings [P/E] P/E 34.14 9.20
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 1.02 2.39
Dividend Payout Ratio % Div Payout % (Qtr) 98.60 8.25
Dividend per Basic Share Div per Share (Qtr) 5.44 0.63
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 237.76 9.91
Interest Coverage Int. cover (Qtr) 11.71 8.38
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -0.86 -155.98
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 27.89 45.60
Dividend Growth (1y) % Div 1y % (Qtr) 4.62 5.64
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 2.42 26.23
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 9.87 47.12
EBIT Growth (1y) % EBIT 1y % (Qtr) 1.81 25.83
EBT Growth (1y) % EBT 1y % (Qtr) 0.97 39.93
EPS Growth (1y) % EPS 1y % (Qtr) 1.85 24.64
FCF Growth (1y) % FCF 1y % (Qtr) 41.69 244.42
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 7.75 43.10
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.49 0.49
Cash Payout Ratio Cash Payout (Qtr) 0.42 0.09
Cash Ratio Cash Ratio (Qtr) 1.06 2.23
Current Ratio Curr Ratio (Qtr) 4.45 5.43
Debt to Equity Ratio Debt/Equity (Qtr) 0.84 0.34
Interest Cover Ratio Int Coverage (Qtr) 11.71 8.38
Times Interest Earned Times Interest Earned (Qtr) 11.71 8.38
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 46.90 -112.38
EBIT Margin % EBIT Margin % (Qtr) 36.08 -91.98
EBT Margin % EBT Margin % (Qtr) 33.00 -132.25
Gross Margin % Gross Margin % (Qtr) 57.50 47.73
Net Profit Margin % Net Margin % (Qtr) 29.20 -133.26