Texas Instruments Inc (TXN) Extended Graph Alalysis
May 18th, 2020 Posted by criseldar Extended Analysis No Comment yetCompany Profile
Texas Instruments Incorporated (NASDAQ: TXN) designs and manufactures, tests and sells analog and embedded semiconductor chips around the world. The company was founded in 1930 as Geophysical Service Inc., an oil and gas exploration company however in the 1950s became officially Texas Instruments Incorporated a semiconductor conductor industry. Headquartered in Dallas, Texas in the United States.
The company market in electronic systems includes industrial, automotive, personal electronics, communications equipment and enterprise systems.
Texas Instruments (TXN) Extended graph Analysis
1. TXN CASH FLOW
2015 | 2016 | 2017 | 2018 | 2019 | 2020 | |
Net cash flow provided by operating activitIes | 4,268,000,000 | 4,614,000,000 | 5,363,000,000 | 7,189,000,000 | 6,649,000,000 | 6,393,000,000 |
Net cash used for investing activities | -302,000,000 | -650,000,000 | -1,127,000,000 | -78,000,000 | -1,920,000,000 | -2,267,000,000 |
Net cash provided by (used for) financing activities | -4,165,000,000 | -3,810,000,000 | -3,734,000,000 | -6,329,000,000 | -4,730,000,000 | -5,328,000,000 |
Capital expenditure | -551,000,000 | -531,000,000 | -695,000,000 | -1,131,000,000 | -847,000,000 | -757,000,000 |
Free cash flow | 3,717,000,000 | 4,083,000,000 | 4,668,000,000 | 6,058,000,000 | 5,802,000,000 | 5,636,000,000 |
Working Capital | 4,519,000,000 | 5,193,000,000 | 6,476,000,000 | 5,623,000,000 | 6,638,000,000 | 6,638,000,000 |
Facts:
- Cash provided by operating activities was $6 billion in the trailing twelve months.
- Net cash from investing activities was $-2 billion in the trailing twelve months.
- Cash provided by (used for) financing activities was $-5 billion in the trailing twelve months.
- Capital expenditures were $-757 million in the trailing twelve months.
- Free cash flow was $6 billion in the trailing twelve months.
- Working capital was $7 billion in the trailing twelve months.
Explanation:
- Cash from operations has a growth rate of 50% in five years, moreover, the management was able to generate cash from operations in the last five years.
- Cash from investing activities were investment in property, plant and equipment, and purchases of investments.
- The cash provided by financing activities were common stock repurchased, dividends paid and other financing activities.
- Capital expenditures was investment in property, plant and equipment.
- Free cash flow grew 52 percent in five years.
- Working capital grew 47 percent in five years.
Interpretation
The management is efficient and capable of producing cash from operations, positive free cash flow and working capital in the last five years.
2. TXN BALANCE SHEET
2015 | 2016 | 2017 | 2018 | 2019 | |
Total cash | 3,218,000,000 | 3,490,000,000 | 4,469,000,000 | 4,233,000,000 | 5,387,000,000 |
Current Assets | 7,074,000,000 | 7,457,000,000 | 8,734,000,000 | 8,097,000,000 | 8,761,000,000 |
Net property, plant and equipment | 2,596,000,000 | 2,512,000,000 | 2,664,000,000 | 3,183,000,000 | 3,303,000,000 |
Total non-current assets | 9,156,000,000 | 8,974,000,000 | 8,908,000,000 | 9,040,000,000 | 9,257,000,000 |
Total assets | 16,230,000,000 | 16,431,000,000 | 17,642,000,000 | 17,137,000,000 | 18,018,000,000 |
Current liabilities | 2,555,000,000 | 2,264,000,000 | 2,258,000,000 | 2,474,000,000 | 2,123,000,000 |
Non-current liabilities | 3,729,000,000 | 3,694,000,000 | 5,047,000,000 | 5,669,000,000 | 6,988,000,000 |
Total liabilities | 6,284,000,000 | 5,958,000,000 | 7,305,000,000 | 8,143,000,000 | 9,111,000,000 |
Retained earnings | 31,176,000,000 | 33,107,000,000 | 34,662,000,000 | 37,906,000,000 | 39,898,000,000 |
Stockholders equity | 9,946,000,000 | 10,473,000,000 | 10,337,000,000 | 8,994,000,000 | 8,907,000,000 |
Facts:
- Total cash was $5 billion in 2019.
- Current assets were $9 billion in 2019.
- Net property, plant and equipment was $3 billion in 2019.
- Non-current assets were $9 billion in 2019.
- Total assets were $18 billion in 2019.
- Current liabilities were $2 billion in 2019.
- Non-current liabilities were $7 billion in 2019.
- Total liabilities were $9 billion in 2019.
- Retained earnings were $40 billion in 2019.
- Stockholders equity was $9 billion in 2019.
Explanation
- Total cash grew 67 percent in five years and it represents 30 percent of the total assets.
- Current assets grew 24 percent in five years and it represented 49 percent of total assets.
- Net property, plant and equipment grew 27 percent in five years and it represented 18 percent of total assets.
- Non-current assets represented 51 percent of the total assets.
- Total assets grew 11 percent in five years.
- Current liabilities represent 23 percent of total liabilities.
- Non-current liabilities represent 77 percent of total liabilities.
- Total liabilities represents 51 percent of total liabilities and stockholders equity.
- Retained earnings increased year-over-year in the last five years.
- Stockholders equity represents 49 percent of total liabilities and stockholders equity.
Interpretation
The company is liquid and stable, and capable of meeting current obligations in due time. Retained earnings was huge compared to total assets, it was over 121 percent of the total assets. The shareholders have 50 percent stake in the total assets and creditors have also 50 percent stake in total assets.
3. TXN INCOME AND MARKET
2015 | 2016 | 2017 | 2018 | 2019 | TTM | |
Revenue | 13,000,000,000 | 13,370,000,000 | 14,961,000,000 | 15,784,000,000 | 14,383,000,000 | 14,118,000,000 |
EBIT | 4,532,000,000 | 5,103,000,000 | 6,531,000,000 | 7,034,000,000 | 5,975,000,000 | 5,811,000,000 |
Net Income | 2,986,000,000 | 3,595,000,000 | 3,682,000,000 | 5,580,000,000 | 5,017,000,000 | 4,976,000,000 |
EBITDA | 5,439,000,000 | 5,965,000,000 | 7,062,000,000 | 7,765,000,000 | 6,948,000,000 | 6,794,000,000 |
Market Capitalization | 55,428,000,000 | 72,932,000,000 | 102,932,000,000 | 89,317,000,000 | 119,570,000,000 | 105,526,000,000 |
Intrinsic Value | 99,968,027,187 | 125,687,492,273 | 171,079,397,912 | 158,840,889,167 | 232,349,843,836 | 268,195,183,423 |
Facts:
- Revenue was $14 billion in the trailing twelve months.
- EBIT was $6 billion in the trailing twelve months.
- Net income was $5 billion in the trailing twelve months.
- EBITDA was $7 billion the trailing twelve months.
- Market capitalization was $105.526 billion in the trailing twelve months.
- Intrinsic value was $268.195 billion in the trailing twelve months.
Explanation
- Revenue grew 9 percent in five years.
- EBIT represents 41 percent of revenue.
- Net income represents 35 percent of revenue and it grew 67 percent in five years.
- EBITDA represents 48 percent of revenue.
- Market capitalization grew 90 percent in five years.
- Intrinsic value was over 154 percent of the market capitalization.
Interpretation
The management was able to generate sufficient revenue for its business operations and net income represents one-third of the revenue which is impressive. The stock price of TXN was undervalued.
4. TXN FINANCIAL RATIOS
2015 | 2016 | 2017 | 2018 | 2019 | TTM | |
Asset turnover (average) | 0.77 | 0.82 | 0.88 | 0.91 | 0.82 | 0.81 |
Return on assets % | 17.34 | 21.74 | 21.41 | 31.84 | 28.54 | 28.66 |
Return on equity % | 28.94 | 34.77 | 35.06 | 57.29 | 56.05 | 61.23 |
Return on invested capital % | 20.6 | 25.60 | 25.94 | 39.62 | 35.59 | 35.89 |
Debt/Equity | 0.31 | 0.28 | 0.34 | 0.48 | 0.62 | 0.71 |
Facts:
- Asset turnover was averaging 0.81 in the trailing twelve months.
- Return on assets was 28.66 percent in the trailing twelve months.
- Return on equity was 61.23 percent in the trailing twelve months.
- Return on invested capital was 35.89 percent in the trailing twelve months.
- Debt to Equity ratio was 0.71 in the trailing twelve months.
Explanation:
- Asset turnover indicates that TXN is generating 81 cents of sales for every dollar invested in assets.
- Return on assets indicates that the company generates 28.66 cents of net income for every dollar invested in assets.
- Return on equity indicates that for every dollar invested in common equity it generated 61.23 cents of net income.
- Debt/Equity ratio indicates that TXN has $0.71 in debt for every dollar of assets.
Interpretation
The financial ratios show that Texas Instruments is in good financial health and liquid. The company was able to generate a good return on the investments made.
5. KEY EXECUTIVE COMPENSATION
2015 | 2016 | 2017 | 2018 | 2019 | |
Key Executive Compensation | |||||
Salary | 1,140,250 | 1,164,083 | 2,375,087 | 3,774,169 | 4,102,917 |
Bonus | 0 | 0 | 0 | 0 | 0 |
Annual Other Income | 0 | 0 | 0 | 0 | 0 |
Restricted Stock Award | 4,900,017 | 4,900,048 | 9,300,131 | 12,800,422 | 13,600,237 |
Securities Options | 4,900,006 | 4,900,007 | 8,300,033 | 12,800,070 | 13,600,039 |
LTIP Payout | 0 | 0 | 0 | 0 | 0 |
Non-Equity Compensation | 3,653,877 | 3,682,817 | 6,050,018 | 9,104,833 | 8,580,583 |
Other Compensation | 317,702 | 325,510 | 407,131 | 642,455 | 0 |
Total | 14,925,802 | 15,080,069 | 25,090,172 | 39,123,826 | 42,670,368 |
Richard K. Templetion/ Chairman of the Board, President and Chief Executive Officer
|
|||||
Salary | 1,140,250 | 1,164,083 | 1,188,004 | 1,131,252 | 1,295,833 |
Bonus | 0 | 0 | 0 | 0 | 0 |
Annual Other Income | 0 | 0 | 0 | 0 | 0 |
Restricted Stock Award | 4,900,017 | 4,900,048 | 5,500,010 | 6,000,091 | 6,500,045 |
Securities Options | 4,900,006 | 4,900,007 | 5,500,004 | 600,019 | 6,500,012 |
LTIP Payout | 0 | 0 | 0 | 0 | 0 |
Non-Equity Compensation | 3,653,877 | 3,682,817 | 3,862,601 | 4,026,250 | 3,809,167 |
Other Compensation | 317,702 | 325,510 | 329,825 | 418,612 | 326,162 |
Total | 14,925,802 | 15,080,069 | 16,546,722 | 17,576,224 | 18,633,807 |
Rafael R. Lizardi/ SVP and CFO | |||||
Salary | 488,333 | 591,667 | 655,000 | ||
Bonus | 0 | 0 | 0 | ||
Annual Other Income | 0 | 0 | 0 | ||
Restricted Stock Award | 2,000,047 | 1,200,084 | 1,500,058 | ||
Securities Options | 1,000,013 | 1,200,013 | 1,500,006 | ||
LTIP Payout | 0 | 0 | 0 | ||
Non-Equity Compensation | 947,667 | 1,118,333 | 1,081,000 | ||
Other Compensation | 60,814 | 77,072 | 125,671 | ||
Total | 4,496,874 | 4,187,169 | 4,861,735 | ||
R. Gregory (greg) Delagi / Former Senior VP
|
|||||
Salary | 698,750 | 713,750 | 728,750.00 | ||
Bonus | 0 | 0 | 0.00 | ||
Annual Other Income | 0 | 0 | 0.00 | ||
Restricted Stock Award | 1,800,074 | 1,800,071 | 1,800,028.00 | ||
Securities Options | 1,800,016 | 1,800,008 | 1,800,003.00 | ||
LTIP Payout | 0 | 0 | 0.00 | ||
Non-Equity Compensation | 1,239,750 | 1,292,750 | 1,125,750.00 | ||
Other Compensation | 16,492 | 5,500 | 6,045.00 | ||
Total | 7,046,576 | 5,613,956 | 7,414,651.00 | ||
Niels Anderskouv / Senior VP | |||||
Salary | 668,750 | 711,667.00 | |||
Bonus | 0 | 0.00 | |||
Annual Other Income | 0 | 0.00 | |||
Restricted Stock Award | 1,900,088 | 1,900,053.00 | |||
Securities Options | 1,900,015 | 1,900,009.00 | |||
LTIP Payout | 0 | 0.00 | |||
Non-Equity Compensation | 1,333,750 | 1,282,333.00 | |||
Other Compensation | 89,458 | 103,898.00 | |||
Total | 5,892,061 | 5,897,960.00 | |||
Haviv Ilan / Senior Vice President | |||||
Salary | 668,750 | 711,667.00 | |||
Bonus | 0 | 0.00 | |||
Annual Other Income | 0 | 0.00 | |||
Restricted Stock Award | 1,900,088 | 1,900,053.00 | |||
Securities Options | 1,900,015 | 1,900,009.00 | |||
LTIP Payout | 0 | 0.00 | |||
Non-Equity Compensation | 1,333,750 | 1,282,333.00 | |||
Other Compensation | 51,813 | 68,153.00 | |||
Total | 5,854,416 | 5,862,215 |
Facts:
- The total key executive compensation in 2015 was $ 14,925,802.
- Total key executive compensation in 2016 was $15,080,069.
- Total key executive compensation in 2017 was $16,546,722.
- Key executive compensation in 2018 was $39,123,826.
- Key executive compensation in 2019 was $42,670,368.
Explanation
- Total executive compensation represents 0.85 percent of the net income in 2019.
- Richard K. Templetion, CEO compensation represents 44 percent of the total executive compensation in 2019.
- Rafael R. Lizardi, CFO compensation represents 11 percent of the total executive compensation in 2019.
- R. Gregory (greg) Delagi, Former Senior VP compensation represents 17 percent of the total executive compensation in 2019.
- Niels Anderskouv / Senior VP compensation represents 14 percent of the total executive compensation in 2019.
- Haviv Ilan / Senior Vice President compensation represents 14 percent of the total executive compensation in 2019.
Interpretation
Total executive compensation includes salary, restricted stock award, securities options, non-equity compensation and other compensation.
6. TXN LOBBYING AND CONTRIBUTIONS
PERIOD | AMOUNT | PERIOD | AMOUNT |
1998 | $2,226,000 | 2010 | $1,600,000 |
1999 | $1,910,000 | 2011 | $1,880,000 |
2000 | $2,200,000 | 2012 | $1,810,000 |
2001 | $2,090,000 | 2013 | $1,740,000 |
2002 | $2,600,000 | 2014 | $1,680,000 |
2003 | $1,740,000 | 2015 | $2,050,000 |
2004 | $2,120,000 | 2016 | $1,860,000 |
2005 | $2,200,000 | 2017 | $2,160,000 |
2006 | $2,310,000 | 2018 | $1,960,000 |
2007 | $2,760,000 | 2019 | $1,540,000 |
2008 | $2,140,000 | 2020 | $1,739,631 |
2009 | $1,800,000 |
Facts:
Texas Instruments Inc is spending lobbying and contributions annually and record shows above lobbying from 1998 to 2019.
Explanation:
Note from OpenSecret.org Center for Responsive Politics, quoted below:
NOTE: Figures on this page are calculations by the Center for Responsive Politics based on data from the Senate Office of Public Records. Data for the most recent year was downloaded on April 22, 2020 and includes spending from January 1 – March 31. Prior years include spending from January through December.
Interpretation
Annually the lobbying may increase or decrease depending on the federal government on how much attention they are giving their issues.
7. TXN FINANCIAL STRENGTH
DATA
Working capital | $6,638,000,000 |
Total assets | $18,018,000,000 |
Sales | $14,118,000,000 |
EBIT | $5,811,000,000 |
Market value of equity | $106,526,000,000 |
Book value of total liabilities | $9,111,000,000 |
Retained earnings | $39,898,000,000 |
CALCULATION
Ratio | Score | Result | |
A – Working Capital / Total Assets | 0.37 | 1.20 | 0.44 |
B – Retained Earnings / Total Assets | 2.21 | 1.40 | 3.10 |
C – EBIT / Total Assets | 0.32 | 3.30 | 1.06 |
D – Market Value of Equity / Book Value of Total Liabilities | 11.69 | 0.60 | 7.02 |
E – Sales / Total Assets | 0.78 | 1.00 | 0.78 |
Z-Score | 12.41 |
Formula: Z-Score = 1.2A + 1.4B + 3.3C + 0.6D + 1.0E
Explanation:
Z-Score is a statistical measurement that compares data points from different sets of data to find correlations. This measurement by Dr. Edward Altman is a significant measure in determining the financial strength of the company because it relies on different weighted financial liquidity and profitability metrics to come up with the overall score. This measure indicates the probability of bankruptcy.
Interpretation
The calculated Z-Score of Texas Instruments Inc was 12.41. Dr. Altman’s grading scale of 3.0 and above indicates that the company will not declare bankruptcy in near future. In other terms, the company is not close to insolvency. The main factors of this statistical measurement are profitability, liquidity, leverage and efficiency. Texas Instruments has a strong financial health and is very far from insolvency.
Overview
Texas Instruments Inc is stable and healthy, the income statement shows that the company is profitable in the last five years of operations. The management is very efficient in generating sufficient and impressive revenue for its normal business operations in five years. The stock price of TXN is undervalued at the time this article was published and might be a good candidate for a Buy.
CITATION
http://www.ti.com/about-ti/company/history.html
https://www.morningstar.com/stocks/xnas/txn/quote
https://www.opensecrets.org/federal-lobbying/clients/summary?cycle=2019&id=D000000722
Researched and written by Criselda