Latest news with #TexasInstrumentsIncorporated
Yahoo
21-05-2025
- Business
- Yahoo
Are Texas Instruments Incorporated (NASDAQ:TXN) Investors Paying Above The Intrinsic Value?
The projected fair value for Texas Instruments is US$151 based on 2 Stage Free Cash Flow to Equity Texas Instruments is estimated to be 25% overvalued based on current share price of US$189 The US$179 analyst price target for TXN is 18% more than our estimate of fair value In this article we are going to estimate the intrinsic value of Texas Instruments Incorporated (NASDAQ:TXN) by taking the forecast future cash flows of the company and discounting them back to today's value. We will take advantage of the Discounted Cash Flow (DCF) model for this purpose. Models like these may appear beyond the comprehension of a lay person, but they're fairly easy to follow. Companies can be valued in a lot of ways, so we would point out that a DCF is not perfect for every situation. If you still have some burning questions about this type of valuation, take a look at the Simply Wall St analysis model. AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early. We're using the 2-stage growth model, which simply means we take in account two stages of company's growth. In the initial period the company may have a higher growth rate and the second stage is usually assumed to have a stable growth rate. To begin with, we have to get estimates of the next ten years of cash flows. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years. A DCF is all about the idea that a dollar in the future is less valuable than a dollar today, so we need to discount the sum of these future cash flows to arrive at a present value estimate: 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Levered FCF ($, Millions) US$2.19b US$6.24b US$8.80b US$10.1b US$10.7b US$11.1b US$11.6b US$12.0b US$12.4b US$12.7b Growth Rate Estimate Source Analyst x10 Analyst x11 Analyst x5 Analyst x2 Analyst x1 Est @ 4.35% Est @ 3.87% Est @ 3.53% Est @ 3.30% Est @ 3.13% Present Value ($, Millions) Discounted @ 9.4% US$2.0k US$5.2k US$6.7k US$7.0k US$6.8k US$6.5k US$6.2k US$5.8k US$5.5k US$5.2k ("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = US$57b After calculating the present value of future cash flows in the initial 10-year period, we need to calculate the Terminal Value, which accounts for all future cash flows beyond the first stage. For a number of reasons a very conservative growth rate is used that cannot exceed that of a country's GDP growth. In this case we have used the 5-year average of the 10-year government bond yield (2.8%) to estimate future growth. In the same way as with the 10-year 'growth' period, we discount future cash flows to today's value, using a cost of equity of 9.4%. Terminal Value (TV)= FCF2034 × (1 + g) ÷ (r – g) = US$13b× (1 + 2.8%) ÷ (9.4%– 2.8%) = US$197b Present Value of Terminal Value (PVTV)= TV / (1 + r)10= US$197b÷ ( 1 + 9.4%)10= US$80b The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is US$137b. To get the intrinsic value per share, we divide this by the total number of shares outstanding. Relative to the current share price of US$189, the company appears slightly overvalued at the time of writing. Remember though, that this is just an approximate valuation, and like any complex formula - garbage in, garbage out. Now the most important inputs to a discounted cash flow are the discount rate, and of course, the actual cash flows. If you don't agree with these result, have a go at the calculation yourself and play with the assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Texas Instruments as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 9.4%, which is based on a levered beta of 1.537. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. See our latest analysis for Texas Instruments Strength Debt is well covered by earnings and cashflows. Weakness Earnings declined over the past year. Dividend is low compared to the top 25% of dividend payers in the Semiconductor market. Expensive based on P/E ratio and estimated fair value. Opportunity Annual revenue is forecast to grow faster than the American market. Threat Dividends are not covered by earnings and cashflows. Annual earnings are forecast to grow slower than the American market. Although the valuation of a company is important, it is only one of many factors that you need to assess for a company. The DCF model is not a perfect stock valuation tool. Instead the best use for a DCF model is to test certain assumptions and theories to see if they would lead to the company being undervalued or overvalued. For example, changes in the company's cost of equity or the risk free rate can significantly impact the valuation. What is the reason for the share price exceeding the intrinsic value? For Texas Instruments, there are three essential elements you should further examine: Risks: For instance, we've identified 2 warning signs for Texas Instruments (1 is a bit concerning) you should be aware of. Future Earnings: How does TXN's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart. Other Solid Businesses: Low debt, high returns on equity and good past performance are fundamental to a strong business. Why not explore our interactive list of stocks with solid business fundamentals to see if there are other companies you may not have considered! PS. Simply Wall St updates its DCF calculation for every American stock every day, so if you want to find the intrinsic value of any other stock just search here. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Yahoo
21-05-2025
- Business
- Yahoo
Texas Instruments prices $1.2 billion of investment grade notes
DALLAS, May 20, 2025 /PRNewswire/ -- Texas Instruments Incorporated (TI) (Nasdaq: TXN) today announced the pricing of two series of senior unsecured notes for an aggregate principal amount of $1.2 billion. The notes consist of the following: $550 million of 4.500% senior unsecured notes due May 23, 2030; and $650 million of 5.100% senior unsecured notes due May 23, 2035. TI expects to use the net proceeds of this offering for general corporate purposes. The offering is expected to close on May 23, 2025. Barclays Capital Inc.; Morgan Stanley & Co. LLC; and MUFG Securities Americas Inc. are serving as joint book-running managers for the offering. The offering of the notes is made only by means of a prospectus and a related prospectus supplement, copies of which may be obtained for free by visiting EDGAR on the Securities and Exchange Commission website at or, in the alternative, from Barclays Capital Inc., c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, NY 11717, by toll-free phone: (888) 603-5847 or by email: barclaysprospectus@ Morgan Stanley & Co. LLC, Attention: Prospectus Department, 180 Varick Street, 2nd Floor, New York, NY 10014, by toll-free phone: (866) 718-1649 or by email: prospectus@ or MUFG Securities Americas Inc., Attention: Capital Markets Group, 1221 Avenue of the Americas, 6th Floor, New York, NY 10020, by toll-free phone: (877) 649-6848. This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the notes or any other securities, nor will there be any sale of the notes or any other securities in any state or jurisdiction in which such an offer, solicitation or sale is not permitted. About Texas Instruments Texas Instruments Incorporated (Nasdaq: TXN) is a global semiconductor company that designs, manufactures and sells analog and embedded processing chips for markets such as industrial, automotive, personal electronics, enterprise systems and communications equipment. At our core, we have a passion to create a better world by making electronics more affordable through semiconductors. This passion is alive today as each generation of innovation builds upon the last to make our technology more reliable, more affordable and lower power, making it possible for semiconductors to go into electronics everywhere. TXN-G View original content to download multimedia: SOURCE Texas Instruments Incorporated Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Malaysian Reserve
20-05-2025
- Business
- Malaysian Reserve
Texas Instruments prices $1.2 billion of investment grade notes
DALLAS, May 20, 2025 /PRNewswire/ — Texas Instruments Incorporated (TI) (Nasdaq: TXN) today announced the pricing of two series of senior unsecured notes for an aggregate principal amount of $1.2 billion. The notes consist of the following: $550 million of 4.500% senior unsecured notes due May 23, 2030; and $650 million of 5.100% senior unsecured notes due May 23, 2035. TI expects to use the net proceeds of this offering for general corporate purposes. The offering is expected to close on May 23, 2025. Barclays Capital Inc.; Morgan Stanley & Co. LLC; and MUFG Securities Americas Inc. are serving as joint book-running managers for the offering. The offering of the notes is made only by means of a prospectus and a related prospectus supplement, copies of which may be obtained for free by visiting EDGAR on the Securities and Exchange Commission website at or, in the alternative, from Barclays Capital Inc., c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, NY 11717, by toll-free phone: (888) 603-5847 or by email: barclaysprospectus@ Morgan Stanley & Co. LLC, Attention: Prospectus Department, 180 Varick Street, 2nd Floor, New York, NY 10014, by toll-free phone: (866) 718-1649 or by email: prospectus@ or MUFG Securities Americas Inc., Attention: Capital Markets Group, 1221 Avenue of the Americas, 6th Floor, New York, NY 10020, by toll-free phone: (877) 649-6848. This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the notes or any other securities, nor will there be any sale of the notes or any other securities in any state or jurisdiction in which such an offer, solicitation or sale is not permitted. About Texas Instruments Texas Instruments Incorporated (Nasdaq: TXN) is a global semiconductor company that designs, manufactures and sells analog and embedded processing chips for markets such as industrial, automotive, personal electronics, enterprise systems and communications equipment. At our core, we have a passion to create a better world by making electronics more affordable through semiconductors. This passion is alive today as each generation of innovation builds upon the last to make our technology more reliable, more affordable and lower power, making it possible for semiconductors to go into electronics everywhere. TXN-G
Yahoo
20-05-2025
- Business
- Yahoo
Texas Instruments prices $1.2 billion of investment grade notes
DALLAS, May 20, 2025 /PRNewswire/ -- Texas Instruments Incorporated (TI) (Nasdaq: TXN) today announced the pricing of two series of senior unsecured notes for an aggregate principal amount of $1.2 billion. The notes consist of the following: $550 million of 4.500% senior unsecured notes due May 23, 2030; and $650 million of 5.100% senior unsecured notes due May 23, 2035. TI expects to use the net proceeds of this offering for general corporate purposes. The offering is expected to close on May 23, 2025. Barclays Capital Inc.; Morgan Stanley & Co. LLC; and MUFG Securities Americas Inc. are serving as joint book-running managers for the offering. The offering of the notes is made only by means of a prospectus and a related prospectus supplement, copies of which may be obtained for free by visiting EDGAR on the Securities and Exchange Commission website at or, in the alternative, from Barclays Capital Inc., c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, NY 11717, by toll-free phone: (888) 603-5847 or by email: barclaysprospectus@ Morgan Stanley & Co. LLC, Attention: Prospectus Department, 180 Varick Street, 2nd Floor, New York, NY 10014, by toll-free phone: (866) 718-1649 or by email: prospectus@ or MUFG Securities Americas Inc., Attention: Capital Markets Group, 1221 Avenue of the Americas, 6th Floor, New York, NY 10020, by toll-free phone: (877) 649-6848. This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the notes or any other securities, nor will there be any sale of the notes or any other securities in any state or jurisdiction in which such an offer, solicitation or sale is not permitted. About Texas Instruments Texas Instruments Incorporated (Nasdaq: TXN) is a global semiconductor company that designs, manufactures and sells analog and embedded processing chips for markets such as industrial, automotive, personal electronics, enterprise systems and communications equipment. At our core, we have a passion to create a better world by making electronics more affordable through semiconductors. This passion is alive today as each generation of innovation builds upon the last to make our technology more reliable, more affordable and lower power, making it possible for semiconductors to go into electronics everywhere. TXN-G View original content to download multimedia: SOURCE Texas Instruments Incorporated Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
19-05-2025
- Business
- Yahoo
Was Jim Cramer Right About Texas Instruments (TXN) Stock?
Back in 2024, on May 14, Mad Money's Jim Cramer discussed the U.S. government doubling tariffs on so-called 'legacy semiconductors' — older-generation chips where the U.S. had become reliant on foreign supply. He pointed to Texas Instruments Incorporated (NASDAQ:TXN) as the clearest American winner from that policy at the time, saying: "The government's doubling the tariff on legacy semiconductors from 25% to 50%. Legacy can be a slippery term. When COVID raged, we knew that our country couldn't produce enough of the older, larger form factor chips — not the state-of-the-art Nvidia kind of chips — making us hostage to foreign suppliers. And then those supply chains got busted. So this is part of a larger strategy to bring semiconductor manufacturing back home. Now here's one where the market actually got it right — Texas Instruments, the biggest legacy chipmaker, soared. Its stock jumped three bucks to a new 52-week high today. Too late to buy? I think so." Cramer's timing was appropriate, as the stock fell 1.98% since his 'too late to buy' warning. A robotic arm in the process of assembling a complex circuit board - showing the industrial scale the company operates at. Texas Instruments Incorporated (NASDAQ:TXN) is a leading designer and producer of analog and embedded semiconductor chips used across industrial and automotive applications. Talking about the company again in April, Cramer said the following: 'Texas is so non-promotional, it was like, look we've had the customers don't have enough inventory so things are better.' He also highlighted his optimism earlier this year in January, saying: "Right. People keep wanting Texas Instruments to be something other than it is. It's an industrial company. Very good. 20% of business is in China by the way. Love the China. […] Texas Instruments is an industrial company. And it trades like one. And these analysts keep thinking it's going to trade like the Texas Instruments of 1982, 84. They ought to get the program. I think that Texas Instruments is very forthcoming. They used to be less forthcoming. But they're basically saying, look, our markets aren't that good. And they can't outrun their own markets. […] While we acknowledge the potential of TXN to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than TXN and that has 100x upside potential, check out our report about this cheapest AI stock. READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires. Disclosure: None. Sign in to access your portfolio
