Texas Instruments Incorporated (TXN) | Investment Case

1. Company Snapshot

1.a. Company Description

Texas Instruments Incorporated designs, manufactures, and sells semiconductors to electronics designers and manufacturers worldwide.It operates in two segments, Analog and Embedded Processing.The Analog segment offers power products to manage power requirements in various levels using battery-management solutions, DC/DC switching regulators, AC/DC and isolated controllers and converters, power switches, linear regulators, voltage supervisors, voltage references, and lighting products.

This segment also provides signal chain products that sense, condition, and measure signals to allow information to be transferred or converted for further processing and control for use in end markets, including amplifiers, data converters, interface products, motor drives, clocks, and sensing products.The Embedded Processing segment offers microcontrollers that are used in electronic equipment; digital signal processors for mathematical computations; and applications processors for specific computing activity.This segment offers products for use in various markets, such as industrial, automotive, personal electronics, communications equipment, enterprise systems, and calculators and other.

The company also provides DLP products primarily for use in projectors to create high-definition images; calculators; and application-specific integrated circuits.It markets and sells its semiconductor products through direct sales and distributors, as well as through its website.Texas Instruments Incorporated was founded in 1930 and is headquartered in Dallas, Texas.

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1.b. Last Insights on TXN

Texas Instruments' recent performance was negatively impacted by cautious guidance and an ongoing investment cycle. The company's Q3 '25 revenue grew 14% YoY, but gross margins compressed due to capacity expansion and transition to 300mm fabrication. Elevated inventories and high capex constrain free cash flow, making its forward P/E premium difficult to justify. Macro risks, particularly in analog and auto chips, contribute to a slow recovery. The company's Q4 '25 revenue outlook implies YoY growth but remains below consensus, reflecting seasonality and a cautious pace of recovery.

1.c. Company Highlights

Last Price	180.12
Change Percentage	-1.36%
Open	183.24
Previous Close	182.6
Market Cap ( Millions)	163661
Volume	6373723
Year High	221.69
Year Low	139.95
M A 50	169.91
M A 200	182.66

FCF Yield	1.27%
Dividend Yield	3.05%
ROE	30.41%
Debt / Equity	84.48%
Net Debt / EBIDTA	130.17%
Price To Book	9.85
Price Earnings Ratio	32.47
Price To FCF	78.68
Price To sales	9.48
EV / EBITDA	21.15

2. Texas Instruments' Q3 Earnings: A Closer Look at the Numbers

Texas Instruments reported a revenue of $4.7 billion for the third quarter, representing a 7% sequential increase and a 14% year-over-year increase. The company's analog revenue grew 16% year-over-year, while embedded processing revenue increased by 9%. Gross profit was $2.7 billion, or 57% of revenue, and operating profit was $1.7 billion, or 35% of revenue. Earnings per share (EPS) came in at $1.48, slightly lower than the estimated $1.49. The company's gross margin was impacted by loadings, and it expects to keep inventory flat to down. With a strong balance sheet, Texas Instruments generated $2.2 billion in cash flow from operations in the quarter and $6.9 billion on a trailing twelve-month basis.

Publication Date: Oct -22

                                    📋 Highlights
                                    Revenue Growth::
                                                Q3 revenue reached $4.7B, showing 7% sequential and 14% YoY growth, driven by 16% YoY increase in Analog and 9% in Embedded Processing.
Profit Margins::
                                                Gross profit hit $2.7B (57% margin), while operating profit was $1.7B (35% margin), though EPS dipped to $1.48 due to a $0.10 restructuring charge.
Cash Flow & Returns::
                                                Generated $2.2B in operating cash flow (Q3) and $6.9B TTM, returning $1.39B to shareholders via dividends ($1.2B) and buybacks ($190M).
Market Dynamics::
                                                Industrial revenue grew 25% YoY, and automotive rose 10% sequentially, with data center demand strong, projected at $1.2B run rate in 2025 (50%+ YoY growth).
Guidance & Strategy::
                                                Q4 revenue expected to decline 7% sequentially to $4.22–$4.58B, with focus on maintaining inventory flat and accelerating free cash flow growth amid moderate market recovery.

                                

Segment Performance and Outlook

The industrial market saw a significant increase of about 25% year-over-year and low single-digit growth sequentially, while the automotive market grew upper single digits year-over-year and around 10% sequentially. For the fourth quarter, Texas Instruments expects revenue to be in the range of $4.22 billion to $4.58 billion, with EPS expected to be between $1.13 and $1.39. The company is guiding for a roughly seasonal view, similar to pre-COVID levels, with revenue down about 7% sequentially.

Cash Flow and Capital Allocation

Texas Instruments generated significant cash flow, returning $6.6 billion to owners in the past twelve months through dividends and share repurchases. The company paid $1.2 billion in dividends and repurchased $190 million of its stock. With a strong balance sheet, Texas Instruments has $5.2 billion in cash and short-term investments. The company's free cash flow on a trailing twelve-month basis is up 65% from last year, with potential for further acceleration.

Valuation and Growth Prospects

With a P/E Ratio of 32.6 and an EV/EBITDA of 23.27, Texas Instruments' valuation suggests that the market is pricing in a certain level of growth. Analysts estimate revenue growth of 9.1% for next year. The company's ROIC is 16.2%, and ROE is 30.41%, indicating a strong return on capital. Texas Instruments is well-positioned in growth areas such as data centers, industrial, and automotive, with a long-term growth opportunity in these sectors.

Operational Highlights and Future Plans

The company is focusing on investing in competitive advantages such as manufacturing and technology, a broad product portfolio, and diverse and long-lived positions. Texas Instruments plans to moderate wafer starts and utilization based on revenue growth and is considering a lower CapEx for next year, potentially toward the lower end of the $20 billion to $26 billion range. The data center market is expected to continue growing, with no slowdown in CapEx investments in the foreseeable future.

3. NewsRoom

Texas Instruments (TXN) Stock Declines While Market Improves: Some Information for Investors

Dec -04

Source:

Annandale Capital LLC Purchases 8,628 Shares of Texas Instruments Incorporated $TXN

Dec -04

Source: defenseworld.net

Texas Instruments Incorporated (TXN) Presents at UBS Global Technology and AI Conference 2025 Transcript

Dec -02

Source: seekingalpha.com

Don't Give Up on Dividend Stocks. Investing $7,500 in These 3 High-Yield Stocks Should Help You Generate Over $1,000 in Yearly Dividends.

Nov -29

Source: fool.com

Berry Wealth Group LP Acquires 401 Shares of Texas Instruments Incorporated $TXN

Nov -29

Source: defenseworld.net

Texas Instruments (TXN) Outperforms Broader Market: What You Need to Know

Nov -28

Source:

Baltimore Washington Financial Advisors Inc. Reduces Stock Position in Texas Instruments Incorporated $TXN

Nov -27

Source: defenseworld.net

ADI vs. TXN: Which Semiconductor Stock Has an Edge Now?

Nov -25

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.24%)

6. Segments

Analog

Expected Growth: 8.5%

Texas Instruments’ Analog segment growth is driven by increasing demand for industrial automation, automotive electrification, and 5G infrastructure. Growth is also fueled by the rising adoption of IoT devices and the need for energy-efficient solutions.

Embedded Processing

Expected Growth: 8.4%

Growing demand for autonomous and electric vehicles, increasing adoption of Industry 4.0, and rising need for efficient computing and data processing drive the growth of Texas Instrument’s Embedded Processing segment.

Other

Expected Growth: 4.5%

Texas Instruments’ Other segment is driven by growth in industrial and automotive applications, increasing demand for analog semiconductors, and expanding presence in emerging markets.

7. Detailed Products

Analog and Embedded Processing

A wide range of analog and embedded processing products, including data converters, amplifiers, interface products, and microcontrollers.

Connectivity

A variety of connectivity products, including Wi-Fi, Bluetooth, and Ethernet solutions.

DLP Products

Digital Light Processing (DLP) technology-based products, including DLP chips, development kits, and software.

Power Management

A range of power management products, including power converters, battery management, and power amplifiers.

Semiconductors

A broad portfolio of semiconductor products, including logic, analog, and microcontrollers.

Software and Tools

A range of software and development tools, including code generation, debugging, and simulation tools.

Wireless Connectivity

A range of wireless connectivity products, including Wi-Fi, Bluetooth, and other wireless technologies.

8. Texas Instruments Incorporated's Porter Forces

Forces Ranking

Threat Of Substitutes

Texas Instruments Incorporated has a moderate threat of substitutes due to the presence of alternative products and technologies in the semiconductor industry.

Bargaining Power Of Customers

Texas Instruments Incorporated has a low bargaining power of customers due to its strong brand reputation and diversified customer base.

Bargaining Power Of Suppliers

Texas Instruments Incorporated has a moderate bargaining power of suppliers due to the presence of multiple suppliers in the industry.

Threat Of New Entrants

Texas Instruments Incorporated has a low threat of new entrants due to the high barriers to entry in the semiconductor industry.

Intensity Of Rivalry

Texas Instruments Incorporated operates in a highly competitive industry with intense rivalry among established players.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	39.91%
Debt Cost	3.95%
Equity Weight	60.09%
Equity Cost	8.92%
WACC	6.93%
Leverage	66.42%

11. Quality Control: Texas Instruments Incorporated passed 4 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Inefficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Lam Research

A-Score: 5.5/10

Value: 0.8

Growth: 8.1

Quality: 8.3

Yield: 2.0

Momentum: 9.0

Volatility: 4.7

1-Year Total Return ->

KLA

A-Score: 5.4/10

Value: 0.8

Growth: 8.4

Quality: 7.9

Yield: 2.0

Momentum: 8.5

Volatility: 5.0

1-Year Total Return ->

Broadcom

A-Score: 5.4/10

Value: 0.0

Growth: 7.6

Quality: 8.1

Yield: 3.0

Momentum: 9.5

Volatility: 4.0

1-Year Total Return ->

Applied Materials

A-Score: 4.9/10

Value: 1.6

Growth: 8.1

Quality: 8.1

Yield: 2.0

Momentum: 5.0

Volatility: 4.7

1-Year Total Return ->

Texas Instruments

A-Score: 4.5/10

Value: 1.5

Growth: 3.6

Quality: 6.9

Yield: 6.0

Momentum: 3.0

Volatility: 6.0

1-Year Total Return ->

Microchip Technology

A-Score: 3.3/10

Value: 2.9

Growth: 1.9

Quality: 3.6

Yield: 5.0

Momentum: 2.5

Volatility: 4.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

21.34%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

6.93%

Texas Instruments Incorporated - US8825081040

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on TXN

1.c. Company Highlights

Higher Yield

Less Volatile

Expensive

Earnings Beats

Revenues Beats

Medium Volatility

Average Quality

Better Quality

2. Texas Instruments' Q3 Earnings: A Closer Look at the Numbers

Segment Performance and Outlook

Cash Flow and Capital Allocation

Valuation and Growth Prospects

Operational Highlights and Future Plans

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.24%)

6. Segments

Analog

Expected Growth: 8.5%

Embedded Processing

Expected Growth: 8.4%

Other

Expected Growth: 4.5%

7. Detailed Products

Analog and Embedded Processing

Connectivity

DLP Products

Power Management

Semiconductors

Software and Tools

Wireless Connectivity

8. Texas Instruments Incorporated's Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Texas Instruments Incorporated passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

180.12$

Current Price

180.12$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA