Texas Instruments Inc (TXN, Financial) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $177.9, Texas Instruments Inc has witnessed a daily gain of 1.51%, marked against a three-month change of 9.26%. A thorough analysis, underlined by the GF Score, suggests that Texas Instruments Inc is well-positioned for substantial growth in the near future.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 7/10
- Profitability rank: 9/10
- Growth rank: 9/10
- GF Value rank: 5/10
- Momentum rank: 8/10
Each one of these components is ranked and the ranks also have positive correlation with the long term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. With high ranks in financial strength, profitability, and growth, but a moderate GF Value rank, GuruFocus assigned Texas Instruments Inc the GF Score of 92 out of 100, which signals the highest outperformance potential.
Understanding Texas Instruments Inc Business
Texas Instruments Inc, with a market cap of $161.98 billion and sales of $16.8 billion, is a dominant force in the semiconductor industry. Based in Dallas, the company generates over 95% of its revenue from semiconductors, with the remainder from its well-known calculators. As the world's largest maker of analog chips, which are used to process real-world signals such as sound and power, Texas Instruments Inc also boasts a leading market share in processors and microcontrollers used in a wide variety of electronics applications. With an operating margin of 39.04%, the company's financial metrics reflect a strong competitive position and operational efficiency.
Financial Strength Breakdown
According to the Financial Strength rating, Texas Instruments Inc's robust balance sheet exhibits resilience against financial volatility, reflecting prudent management of capital structure. The Interest Coverage ratio for Texas Instruments Inc stands impressively at 16.36, underscoring its strong capability to cover its interest obligations. This robust financial position resonates with the wisdom of legendary investor Benjamin Graham, who favored companies with an interest coverage ratio of at least 5. With an Altman Z-Score of 9.08, Texas Instruments Inc exhibits a strong defense against financial distress, highlighting its robust financial stability. With a favorable Debt-to-Revenue ratio of 0.85, Texas Instruments Inc's strategic handling of debt solidifies its financial health.
Profitability Rank Breakdown
The Profitability Rank shows Texas Instruments Inc's impressive standing among its peers in generating profit. The company's strong Predictability Rank of 4.5 stars out of five underscores its consistent operational performance, providing investors with increased confidence in the company's ability to maintain its profitability.
Growth Rank Breakdown
Ranked highly in Growth, Texas Instruments Inc demonstrates a strong commitment to expanding its business. The company's 3-Year Revenue Growth Rate is 7.3%, which outperforms better than 52.57% of 913 companies in the Semiconductors industry. Moreover, Texas Instruments Inc has seen a robust increase in its earnings before interest, taxes, depreciation, and amortization (EBITDA) over the past few years. Specifically, the three-year growth rate stands at 8.4, and the rate over the past five years is 8.9. This trend accentuates the company's continued capability to drive growth.
Next Steps
Considering Texas Instruments Inc's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential outperformance. Investors seeking to capitalize on this opportunity may consider the company's consistent track record and strategic market position as indicators of its future success. With a GF Score of 92, Texas Instruments Inc stands out as a compelling investment for those looking to benefit from the company's robust financial health and growth prospects.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
