High Return on Equity
Strong Profit Margins
Strong Liquidity Ratios
Low Debt Levels
💼 Strong Competitive Position
🏗️ Robust Financial Management
🔮 Secular Growth Opportunities
🏗️ Strategic Capital Investments
High Valuation Ratios
High PFCF Ratio
High Dividend Payout Ratio
📉 Margin Pressure in Embedded Business
⚠️ Short-Term Revenue Guidance
Overall, Texas Instruments demonstrates solid business quality through its competitive positioning, strong financial management, and strategic focus on growth markets. However, the company faces short-term challenges with margin pressures in its Embedded segment and cautious revenue guidance for the near term. Future prospects remain promising due to ongoing investments and growth opportunities in key sectors.
Analysis Date: January 23, 2025
Last Updated: March 12, 2025
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Benjamin Graham's value investing approach focuses on finding stocks with a significant margin of safety between their intrinsic value and market price.
Intrinsic Value
Estimated fair value based on Graham's formula
$65.78
Current Market Price: $151.04
IV/P Ratio: 0.44x (>1.0 indicates undervalued)
Margin of Safety
Gap between intrinsic value and market price
-130.0%
Graham recommended a minimum of 20-30% margin of safety
Higher values indicate a greater potential discount to fair value
Graham Criteria Checklist
Benjamin Graham's value investing checklist for TXN
Positive earnings (5+ years)
Dividend history (5+ years)
P/E ratio ≤ 20 (28.77)
P/B ratio ≤ 1.5 (8.17)
Current ratio ≥ 2.0 (4.12x)
Long-term debt < Net current assets (1.13x)
Margin of safety (-130.0%)
TXN does not meet all Graham criteria
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
TXN demonstrates robust profit margins with a gross profit margin of 58.14%, an operating profit margin of 34.15%, and a net profit margin of 30.68%. These metrics indicate strong efficiency in converting revenue into profit.
The price to free cash flow (PFCF) ratio of 118.12 is extremely high, which may indicate that the stock is overvalued in terms of its cash generation capabilities.
Profitability metrics measure a company's ability to generate earnings relative to its revenue, operating costs, and other relevant metrics. Higher values generally indicate better performance.
Return on Equity (ROE)
Measures how efficiently a company uses its equity to generate profits
28.08%
Higher values indicate better returns for shareholders
TTM (as of 2025-04-16)
Return on Assets (ROA)
Measures how efficiently a company uses its assets to generate profits
3.39%
Higher values indicate better asset utilization
TTM (as of 2025-04-16)
Gross Profit Margin
Percentage of revenue retained after accounting for cost of goods sold
58.14%
Higher values indicate better efficiency in production
TTM (as of 2025-04-16)
Net Profit Margin
Percentage of revenue retained after accounting for all expenses
30.68%
Higher values indicate better overall profitability
TTM (as of 2025-04-16)
TXN has a current ratio of 4.12 and a quick ratio of 2.88, indicating a strong ability to meet short-term liabilities and suggesting good liquidity.
The debt to equity ratio of 0.80 and debt to assets ratio of approximately 0.38 suggest that the company maintains a prudent level of debt relative to its equity and assets.
The dividend payout ratio is at 99.92%, indicating that nearly all earnings are paid out as dividends, which may limit reinvestment for growth.
Financial health metrics assess a company's ability to meet its financial obligations and its overall financial stability.
Debt to Equity Ratio
Total debt divided by total equity
0.80x
Lower values indicate less financial leverage and risk
Less than 1.0 is conservative, 1.0-2.0 is moderate, >2.0 indicates high risk
Q4 2024
Current Ratio
Current assets divided by current liabilities
4.12x
Higher values indicate better short-term liquidity
Less than 1.0 is concerning, 1.0-2.0 is adequate, greater than 2.0 is good
Q4 2024
Texas Instruments (TI) maintains a strong competitive position with a diverse product portfolio and a significant share in industrial and automotive markets, making up about 70% of revenue. The company's focus on analog and embedded technology supports a reliable and cost-effective supply for customers.
TI's financial management is commendable, with a solid cash flow generation of $2 billion in Q4 and $6.3 billion for the year. The company has been disciplined in capital allocation, returning $5.7 billion to owners through dividends and stock repurchases.
The Embedded Processing segment has faced significant margin pressure, primarily due to underutilization of the Lehi factory. The company anticipates this will continue in the short term, affecting overall profitability.
There are positive long-term growth prospects in industrial and automotive markets, driven by increasing chip content per application. TI aims to leverage its competitive advantages to capture this secular growth.
TI is in the midst of a six-year elevated CapEx cycle that will enhance its manufacturing capacity with 300-millimeter wafers, positioning the company to meet future demand effectively.
TI provided a cautious outlook for Q1 2025, expecting a sequential decline in revenue and EPS. This reflects seasonal weakness and ongoing challenges in the industrial sector.