2024-04-30 12:44:27 ET
Summary
- Long-term trends and outlook looks strong, but there is still uncertainties.
- Texas Instruments will struggle to grow their dividend with such heavy Capital expenditures.
- According to estimated EPS and stock performance correlation, this would be the time to buy.
- Yet, my DCF assessment suggests a fair value of $162 per share and, considering this, I rate Texas Instruments a HOLD.
Introduction
Over the past decade, Texas Instruments (TXN) shareholders have pocketed some handsome profits, riding on the back of an exceptional dividend and share buyback history. However, from time to time, they are exposed to the cyclicality of the semiconductor industry, which is sensitive to economic variations. Texas Instruments looks expensive with a forward P/E of 37x with earnings expected to continue to fall into 2024. According to my DCF valuation, I believe the market is too optimistic about this company's future prospects, which is why I rate this stock a HOLD....
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Texas Instruments: Looks Fairly Priced On Current Outlook, But Still Carries Several Risks