Contrasting Texas Instruments (TXN) and Its Peers

Texas Instruments (NASDAQ: TXN) is one of 105 publicly-traded companies in the “Semiconductors” industry, but how does it weigh in compared to its competitors? We will compare Texas Instruments to similar businesses based on the strength of its earnings, profitability, valuation, institutional ownership, analyst recommendations, risk and dividends.

Dividends

Texas Instruments pays an annual dividend of $2.00 per share and has a dividend yield of 2.1%. Texas Instruments pays out 50.5% of its earnings in the form of a dividend. As a group, “Semiconductors” companies pay a dividend yield of 1.4% and pay out 58.4% of their earnings in the form of a dividend. Texas Instruments is clearly a better dividend stock than its competitors, given its higher yield and lower payout ratio.

Volatility & Risk

Texas Instruments has a beta of 1.24, meaning that its share price is 24% more volatile than the S&P 500. Comparatively, Texas Instruments’ competitors have a beta of 1.07, meaning that their average share price is 7% more volatile than the S&P 500.

Profitability

This table compares Texas Instruments and its competitors’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Texas Instruments 28.68% 36.52% 23.63%
Texas Instruments Competitors -45.85% 1.38% 0.75%

Valuation & Earnings

This table compares Texas Instruments and its competitors revenue, earnings per share (EPS) and valuation.

Gross Revenue EBITDA Price/Earnings Ratio
Texas Instruments $14.18 billion $6.28 billion 23.59
Texas Instruments Competitors $4.62 billion $1.36 billion 80.34

Texas Instruments has higher revenue and earnings than its competitors. Texas Instruments is trading at a lower price-to-earnings ratio than its competitors, indicating that it is currently more affordable than other companies in its industry.

Insider and Institutional Ownership

83.7% of Texas Instruments shares are owned by institutional investors. Comparatively, 65.7% of shares of all “Semiconductors” companies are owned by institutional investors. 1.0% of Texas Instruments shares are owned by insiders. Comparatively, 6.6% of shares of all “Semiconductors” companies are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Texas Instruments and its competitors, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Texas Instruments 1 14 12 0 2.41
Texas Instruments Competitors 912 4748 8681 364 2.58

Texas Instruments currently has a consensus target price of $86.42, suggesting a potential downside of 7.50%. As a group, “Semiconductors” companies have a potential upside of 9.40%. Given Texas Instruments’ competitors stronger consensus rating and higher possible upside, analysts clearly believe Texas Instruments has less favorable growth aspects than its competitors.

Summary

Texas Instruments beats its competitors on 9 of the 15 factors compared.

Texas Instruments Company Profile

Texas Instruments Incorporated designs, makes and sells semiconductors to electronics designers and manufacturers across the world. The Company operates through two segments: Analog and Embedded Processing. As of December 31, 2016, the Company had design, manufacturing or sales operations in more than 30 countries. The Company’s Analog segment’s product line includes High Volume Analog & Logic (HVAL), Power Management (Power), High Performance Analog (HPA) and Silicon Valley Analog (SVA). HVAL products support applications, such as automotive safety devices, touchscreen controllers, low-voltage motor drivers and integrated motor controllers. The Company’s Embedded Processing segment’s product line includes Processor, Microcontrollers and Connectivity. Processor products include digital signal processors (DSPs) and applications processors. DSPs perform mathematical computations to process digital data.

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