Texas Instruments Inc (TXN) Extended Graph Alalysis

May 18th, 2020 Posted by Extended Analysis No Comment yet

Company Profile

TXN LOGO

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

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

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

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

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

TXN 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

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

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

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