Texas Instruments Inc (TXN) stock analysis

P/E above its 5-year median

Texas Instruments's P/E of 40.2 is above its own 5-year median of 27.4.

P/E above the industry

Texas Instruments's P/E of 40.2 is above the Electronic Components and Accessories median of 34.8.

EV/EBITDA above its 5-year median

Texas Instruments's EV/EBITDA of 34.1 is above its 5-year median of 24.8.

P/B above the industry

Texas Instruments's price-to-book of 14.76 is above the Electronic Components and Accessories median of 3.49.

Trading above fair value

The share price of $309.81 is above our fair value estimate of $225.01.

Margin of safety under 20%

The price is 37.7% above fair value, so there is no margin of safety.

Revenue growing under 10% a year

Revenue grew -4.1% a year over the last three fiscal years, short of the 10% we look for.

EPS growing under 10% a year

Diluted EPS grew -16.6% a year over the last three fiscal years.

Earnings growth accelerating

Net income grew 41.0% over the last twelve months, against a 5-year average of -2.2% a year.

Growing faster than the industry

Revenue grew 20.3% over the last twelve months; the Electronic Components and Accessories median is 17.3%.

Guidance issued

The latest outlook (fourth quarter revenue, Oct 21, 2026) was issued for the first time, so it neither adds nor takes away points.

Gross margin improving

Gross margin was 60.2% over the last twelve months, against 57.5% a year earlier.

Return on equity over 15%

Return on equity was 39.7% over the last twelve months and averaged 46.3% over five years.

Return on capital over 10%

Return on invested capital was 29.6%, above the 10% that usually covers the cost of capital.

Return on equity above the industry

Texas Instruments's return on equity of 39.7% is above the Electronic Components and Accessories median of 4.8%.

Earnings shrank over 5 years

Net income shrank 2.2% a year on average over the last five fiscal years.

Net margin below its 5-year average

Net margin was 34.3% over the last twelve months, against a 5-year average of 36.4%.

Net margin above the industry

Texas Instruments's net margin of 34.3% is above the Electronic Components and Accessories median of 2.9%.

High debt

Debt is 70.7% of shareholders' equity, above the 40% we consider low.

Debt falling against equity

Debt to equity fell from 74.0% five years ago to 70.7%.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 73.0% of total debt.

Interest coverage

Interest expense is not reported separately.

Short-term assets cover short-term debts

Current assets are 5.59 times current liabilities.

Low bankruptcy risk

The Altman Z-score is 13.46; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Texas Instruments paid dividends worth 1.9% of the share price over the last twelve months.

Yield below Treasuries

The 1.9% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Texas Instruments yields 1.9%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 10 fiscal years.

Covered by earnings

Dividends take 72.7% of net income.

Covered by free cash flow

Dividends take 70.7% of free cash flow.