PFM - Texas Instruments: No Rush To Buy

2024-04-18 21:42:16 ET

Summary

• TXN has lost 4% of its value and underperformed its semiconductor peers quite significantly over the past year.
• The company announces its Q1 results on the 23rd of April, and expectations are not particularly great.
• We explore various key metrics such as gross margins, the inventory position, CAPEX commitments, and cash flow.
• Even two years from now, TXN's EPS could likely be 7% lower than the reported EPS of FY23, yet its forward P/E is roughly in line with its 5-year rolling average.
• TXN may offer a better-than-average yield at the moment, but do consider that the pace of dividend growth has consistently slowed in each of the past 5 years and is unlikely to get better, given FCF pressure.

Introduction

The stock of Texas Instruments Incorporated ( TXN ), the large-cap semiconductor entity that specializes in analog and embedded processing chips has experienced an underwhelming twelve months. Over the past year, when its domestic peers from the semiconductor universe have notched up impressive gains of 55%, TXN has lost pace by nearly -4%....

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