Texas Instruments Incorporated

Date: March 03, 2024.

Company’s Overview

Texas Instruments (TXN), a global giant, designs and manufactures those tiny but mighty chips powering countless electronics. From Dallas, they reach over 100,000 customers worldwide, supplying analog and embedded chips, the essential building blocks for everything from phones to industrial equipment.

Competition

Revenue Segments

The Company’s net sales proportions by segment for the most recent quarterly report are composed by:

Related Risks

Texas Instruments isn’t just making tiny chips, they’re facing a whole chip-sized challenge! From economic ups and downs to trade wars and fierce competition, keeping the chips flowing isn’t easy. Even relying on specific chips, managing factories, and debt add stress. But Texas Instruments isn’t just sitting there waiting for a meltdown. They’re diversifying their chip offerings, keeping their factories humming, and managing debt. Talent, cyber threats, and changing regulations are also on their radar.

Texas Instruments isn’t just stacking chips, they’re navigating a techy minefield! Economic storms, trade wars, and fierce competition threaten their chip flow. Even relying on specific chips, managing factories, and debt add heat. But Texas Instruments isn’t melting down. They’re diversifying their chip game, building stronger supply chains, and investing in R&D. Attracting talent, fighting cyber threats, and navigating regulations are also on their chip.

Financial Analysis

Company’s Revenues

Revenues from 2020 to last quarter report:

• Texas Instruments revenue for the quarter ending September 30, 2023 was $4.532B, a 13.53% decline year-over-year.
• Texas Instruments revenue for the twelve months ending September 30, 2023 was $18.112B, a 10.29% decline year-over-year.
• Texas Instruments annual revenue for 2022 was $20.028B, a 9.18% increase from 2021.
• Texas Instruments annual revenue for 2021 was $18.344B, a 26.85% increase from 2020.
• Texas Instruments annual revenue for 2020 was $14.461B, a 0.54% increase from 2019.

The quarterly revenues from 2011 till 2023 are:

Company’s Net Income

Net Income from 2020 to last quarter report:

• Texas Instruments net income for the quarter ending September 30, 2023 was $1.700B, a 25.57% decline year-over-year.
• Texas Instruments net income for the twelve months ending September 30, 2023 was $7.065B, a 20.49% decline year-over-year.
• Texas Instruments annual net income for 2022 was $8.709B, a 12.58% increase from 2021.
• Texas Instruments annual net income for 2021 was $7.736B, a 38.94% increase from 2020.
• Texas Instruments annual net income for 2020 was $5.568B, a 11.7% increase from 2019.

The quarterly net income from 2011 till 2023 is:

Company’s EPS

EPS from 2021 to last quarter report:

• Texas Instruments EPS for the quarter ending September 30, 2023 was $1.85, a 25.1% decline year-over-year.
• Texas Instruments EPS for the twelve months ending September 30, 2023 was $7.71, a 19.18% decline year-over-year.
• Texas Instruments 2022 annual EPS was $9.41, a 13.92% increase from 2021.
• Texas Instruments 2021 annual EPS was $8.26, a 38.36% increase from 2020.
• Texas Instruments 2020 annual EPS was $5.97, a 13.93% increase from 2019.

Company’s Free Cash Flow

Free Cash Flow from 2020 to 2022:

• Texas Instruments annual free cash flow for 2022 was $5.926B, a 6.96% decline from 2021.
• Texas Instruments annual free cash flow for 2021 was $6.369B, a 15.93% increase from 2020.
• Texas Instruments annual free cash flow for 2020 was $5.494B, a 5.8% decline from 2019

The yearly free cash flow from 2010 till 2023 is:

**The 2024 and 2025 values are the expected by the analysts

Quarterly Reports

The Company’s quarterly results from Q1 2018 till its most recent quarter:

Shares Outstanding

As of December 31, 2023, $21.20 billion of stock repurchase authorizations remain, and no expiration date has been specified.

Asset/Liabilities & Current Ratio

Texas Instruments’ financial health appears robust based on their key ratios. Their asset-to-liability ratio of 2.09 indicates that assets exceed liabilities by more than double, providing a significant financial cushion. This strong leverage allows for strategic investments in growth initiatives while maintaining a comfortable debt tolerance.

Furthermore, the current ratio of 4.55 suggests exceptional liquidity. This means Texas Instruments has ample current assets to cover their current liabilities, implying minimal risk of short-term financial difficulties. They possess the resources to meet their immediate obligations comfortably, ensuring smooth operations and financial flexibility.

Valuation

Based on DCF analysis, TXN’s stock price is slightly overvalued. Note that in the analysis we take into consideration also the cash and cash equivalents and the total debt.

After Texas Instruments’ Q4 earnings, some analysts adjusted their ratings. For instance, Cantor Fitzgerald maintained a Neutral rating but reduced the price target from $180 to $170. Mizuho Securities also reiterated a Neutral rating, lowering the price target from $170 to $164.

Texas Instruments stands out as a compelling investment opportunity in my eyes. Their financial performance is undeniably impressive, with strong financials, consistent profitability, and a track record of delivering value to shareholders. The company’s robust balance sheet, evident in their high asset-to-liability and current ratios, provides a solid foundation for future growth.

Additionally, their exceptional return on invested capital (ROIC) demonstrates their efficient use of resources and ability to generate significant profits. Furthermore, their commitment to share buybacks and consistent revenue and stock value appreciation showcases their dedication to rewarding investors.

Considering these factors, Texas Instruments presents itself as a financially sound and attractive option for long-term investors seeking a combination of stability and growth potential.

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Disclaimer

Please note that I am not a licensed financial advisor and the information provided here should not be construed as financial advice. I am simply sharing my understanding of the topics based on my research and personal experiences. It is always advisable to consult with a qualified financial advisor before making any investment decisions.

The information I provide is based on publicly available sources and my own interpretations. I strive to provide accurate and up-to-date information, but I cannot guarantee the correctness or completeness of the information.

Any opinions expressed here are my own and do not necessarily reflect the views of any other individual or organisation.

Please use your own judgement and conduct your own research before making any investment decisions.