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 $168.76, Texas Instruments Inc has witnessed a decline of 1.13% over a period, marked against a three-month change of -4.14%. A thorough analysis, underlined by the GuruFocus Score Rating, suggests that Texas Instruments Inc is well-positioned for substantial growth in the near future.
Decoding 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.
Here is a breakdown of Texas Instruments Inc's GF Score:
- 1. Financial strength rank: 7/10
- 2. Profitability rank: 9/10
- 3. Growth rank: 10/10
- 4. GF Value rank: 6/10
- 5. Momentum rank: 10/10
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 a high growth rank and momentum rank, and a slightly lower GF Value rank, GuruFocus assigned Texas Instruments Inc the GF Score of 95 out of 100, which signals the highest outperformance potential.
Understanding Texas Instruments Inc's Business
Texas Instruments Inc, with a market cap of $153.23 billion and sales of $18.82 billion, is a Dallas-based company that generates over 95% of its revenue from semiconductors and 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 also has a leading market share position in processors and microcontrollers used in a wide variety of electronics applications. The company's operating margin stands impressively at 47.21%, reflecting its strong profitability.
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 32.91, underscoring its strong capability to cover its interest obligations. With an Altman Z-Score of 10.6, Texas Instruments Inc exhibits a strong defense against financial distress. With a favorable Debt-to-Revenue ratio of 0.6, 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. Texas Instruments Inc Operating Margin has increased (16.49%) over the past five years. Furthermore, Texas Instruments Inc's Gross Margin has seen a consistent rise over the past five years. This trend underscores the company's growing proficiency in transforming revenue into profit. Texas Instruments Inc's strong Predictability Rank of 4.5 stars out of five underscores its consistent operational performance, providing investors with increased confidence.
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 12.7%, which outperforms better than 51.5% of 866 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.
Conclusion
Given Texas Instruments Inc's strong financial strength, profitability, and growth metrics, the GuruFocus Score Rating highlights the firm's unparalleled position for potential outperformance. This analysis underscores the company's robust financial health and growth prospects, making it a compelling investment opportunity for value investors.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
