Texas Instruments Incorporated Fundamental Analysis (NASDAQ: TXN)
Texas Instruments Incorporated (NASDAQ: TXN) shows strong financial fundamentals with a PE ratio of 36.80, profit margin of 34.25%, and ROE of 40.51%. The company generates $20.7B in annual revenue with strong year-over-year growth of 13.05%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 83.0/100 based on profitability, valuation, growth, and balance sheet metrics. The B+ grade reflects solid fundamentals with room for improvement in valuation or growth.
Fundamental Health Score
We analyze TXN's fundamental strength across five key dimensions:
Efficiency Score
ExcellentTXN demonstrates superior asset utilization.
Valuation Score
ModerateTXN shows balanced valuation metrics.
Growth Score
ModerateTXN shows steady but slowing expansion.
Financial Health Score
ExcellentTXN maintains a strong and stable balance sheet.
Profitability Score
ExcellentTXN achieves industry-leading margins.
Key Financial Metrics
Is TXN Expensive or Cheap?
P/E Ratio
TXN trades at 36.80 times earnings. This suggests a premium valuation.
PEG Ratio
When adjusting for growth, TXN's PEG of 0.92 indicates potential undervaluation.
Price to Book
The market values Texas Instruments Incorporated at 13.55 times its book value. This suggests the stock is fully valued or overvalued on an asset basis.
EV/EBITDA
Enterprise value stands at 24.13 times EBITDA. This signals the market has high growth expectations.
How Well Does TXN Make Money?
Net Profit Margin
For every $100 in sales, Texas Instruments Incorporated keeps $34.25 as profit after all expenses.
Operating Margin
Core operations generate 40.76 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $40.51 in profit for every $100 of shareholder equity.
ROA
Texas Instruments Incorporated generates $19.31 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
Texas Instruments Incorporated generates strong operating cash flow of $9.89B, reflecting robust business health.
Free Cash Flow
Texas Instruments Incorporated generates strong free cash flow of $7.31B, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $8.01 in free cash annually.
FCF Yield
TXN converts 2.82% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
36.80
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
0.92
vs 25 benchmark
P/B Ratio
Price to book value ratio
13.55
vs 25 benchmark
P/S Ratio
Price to sales ratio
12.51
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
0.71
vs 25 benchmark
Current Ratio
Current assets to current liabilities
5.59
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.41
vs 25 benchmark
ROA
Return on assets percentage
0.19
vs 25 benchmark
ROCE
Return on capital employed
0.25
vs 25 benchmark
How TXN Stacks Against Its Sector Peers
| Metric | TXN Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 36.80 | 33.86 | Neutral |
| ROE | 40.51% | 863.00% | Weak |
| Net Margin | 34.25% | -1938.00% (disorted) | Strong |
| Debt/Equity | 0.71 | 0.61 | Neutral |
| Current Ratio | 5.59 | 12.88 | Strong Liquidity |
| ROA | 19.31% | 99.00% | Weak |
TXN outperforms its industry in 2 out of 6 key metrics, particularly excelling in Net Margin, but lagging in ROE.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews Texas Instruments Incorporated's 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
23.89%
Industry Style: Growth, Innovation, High Beta
High GrowthEPS CAGR
-9.44%
Industry Style: Growth, Innovation, High Beta
DecliningFCF CAGR
18.06%
Industry Style: Growth, Innovation, High Beta
High Growth