Is Texas Instruments a buy?

It’s time to break down a solid semiconductor name. Here is the break down of $TXN, otherwise known as Texas Instruments.

Current Price: $195.88

52/Wk High: $192.54

52/Wk Low: $96.07

Market Cap: $176.6 Billion

Dividend: $4.08 / 2.08% Yield

Read below for the breakdown!

Texas Instruments ($TXN) is a major semiconductor and semiconductor equipment company with a strong focus on analog semiconductors and embedded processors.

Sifting through Texas Instruments stock price, according to the TREFIS (@trefis) price analysis 80.7% of the stock is based on the Analog Semiconductor segment while 13.8% is based on the Embedded Processors segment.

Furthermore, Texas Instruments continues to reduce share count and increase their dividend with a 26% CAGR on their dividend and a consistent 17 years of dividend hikes, Texas Instruments is a semiconductor that pays you to stay.

Throughout recent weeks, the semiconductor names have mostly been shifting to the downside, but Texas Instruments has maintained its resilience and pushed to new highs, rallying 20.21% in just the past three months.

Digging into the numbers, Texas Instruments beat Q4 2020 expectations with an EPS of $1.64, better than the analysts EPS consensus estimate of $1.34. On a year over year basis, EPS improved by 46.63%.

Revenues improved significantly as well, jumping a strong 22% year over year to a whopping $4.076 billion for the quarter. For comparison, the Q4 2019 revenues level was $3.350 billion.

Taking a look at revenues by segment, the company’s Analog segment revenues increased by 25% year over year while the Embedded Processors segment revenues jumped 14%.

As for operating profit, Texas Instruments delivered a strong $1.813 billion in operating profit, representing a 45% jump on a year over year basis.

Net income also increased throughout Q4, totaling $1.688 billion for the quarter, representing a staggering 58% jump on a year over year basis in net income.

While revenues, profits, and income all jumped throughout Q4, cash flow from operations decreased by 8% throughout Q4 to a slightly lower $6.139 billion on a trailing 12 months basis.

Free cash flow also declined throughout the quarter by 5% year over year to a lower $5.490 billion. For comparison, the Q4 2019 free cash flow level was $5.802 billion on a trailing 12 month basis.

Briefly looking at the full year, Texas Instruments experienced solid revenues growth, with FY 2020 revenues totaling $14.461 billion versus the FY 2019 revenues level of $14.383 billion.

Shifting into the balance sheet the numbers are solid.

Total Debt: $6.798 Billion

Total Liabilities: $10.164 Billion

Total Assets: $19.351 Billion

Cash & Short Term Inv: $6.568 Billion

On a valuation basis, Texas Instruments trades at a premium.

Price to Earnings: 32.17x

Forward Price to Earnings: 26.54x

Price to Sales: 12.06x

Price to Book: 19.24x

Price to Cash Flow: 22.89x

Management has been effective as well.

Return on Equity: 61.55%

Return on Assets: 29.94%

Return on Invested Capital: 34.06%

Given the numbers the analysts are neutral with a mean price target of $192.06/share, representing a -1.94% downside.

The high price target is $225.00/share, representing a 14.88% gain, while the low price target is $155.00/share, representing a -20.86% loss.

The big money is also quite involved with 82.23% of Texas Instruments being owned by institutions. Top holders include The Vanguard Group, BlackRock Institutional Trust, and State Street Global Advisors.

On a technical basis, Texas Instruments is bullish. According to the six-month charts the MACD is moving to the upside with significant momentum within a range of 4.92 down to 3.17.

The six-month charts are also indicating an RSI of 69.21 and CCI of 175.34, both of which are on the high end.

In short, Texas Instruments ($TXN) is a solid semiconductor play with expanding revenues, a growing dividend, and a strong management team.

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Disclaimer: This is not direct financial advice, simply an opinion based on independent research.