Intrinsic value of Texas Instruments - TXN

Previous Close

$81.12

  Intrinsic Value

premium content

  Rating & Target

premium content

  Value-price divergence*

premium content

Previous close

$81.12

 
Intrinsic value

$77.16

 
Up/down potential

-5%

 
Rating

hold

 
Value-price divergence* premium content

Premium access subscription - $499/yr

please register and log in before paying

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of TXN stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 81.2

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  2.85
  13.10
  12.29
  11.56
  10.90
  10.31
  9.78
  9.30
  8.87
  8.49
  8.14
  7.82
  7.54
  7.29
  7.06
  6.85
  6.67
  6.50
  6.35
  6.22
  6.09
  5.98
  5.89
  5.80
  5.72
  5.65
  5.58
  5.52
  5.47
  5.42
  5.38
Revenue, $m
  13,370
  15,121
  16,980
  18,943
  21,009
  23,176
  25,443
  27,810
  30,278
  32,848
  35,521
  38,300
  41,189
  44,190
  47,310
  50,552
  53,923
  57,428
  61,075
  64,872
  68,825
  72,944
  77,238
  81,716
  86,388
  91,266
  96,360
  101,682
  107,245
  113,062
  119,146
Variable operating expenses, $m
 
  10,089
  11,276
  12,529
  13,848
  15,231
  16,678
  18,190
  19,765
  21,405
  23,112
  24,450
  26,294
  28,210
  30,201
  32,271
  34,423
  36,661
  38,989
  41,412
  43,936
  46,566
  49,307
  52,165
  55,148
  58,262
  61,514
  64,911
  68,463
  72,176
  76,060
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  8,571
  10,089
  11,276
  12,529
  13,848
  15,231
  16,678
  18,190
  19,765
  21,405
  23,112
  24,450
  26,294
  28,210
  30,201
  32,271
  34,423
  36,661
  38,989
  41,412
  43,936
  46,566
  49,307
  52,165
  55,148
  58,262
  61,514
  64,911
  68,463
  72,176
  76,060
Operating income, $m
  4,799
  5,032
  5,704
  6,414
  7,161
  7,945
  8,765
  9,621
  10,513
  11,442
  12,409
  13,850
  14,895
  15,980
  17,108
  18,281
  19,500
  20,767
  22,086
  23,459
  24,889
  26,378
  27,931
  29,550
  31,240
  33,004
  34,846
  36,771
  38,783
  40,886
  43,086
EBITDA, $m
  5,754
  5,986
  6,721
  7,498
  8,316
  9,174
  10,071
  11,008
  11,985
  13,002
  14,060
  15,160
  16,304
  17,492
  18,727
  20,010
  21,344
  22,732
  24,175
  25,678
  27,243
  28,873
  30,573
  32,346
  34,195
  36,126
  38,142
  40,249
  42,451
  44,753
  47,162
Interest expense (income), $m
  0
  104
  129
  155
  182
  211
  241
  273
  306
  340
  376
  414
  452
  493
  535
  578
  623
  671
  719
  770
  823
  879
  936
  996
  1,058
  1,124
  1,192
  1,263
  1,337
  1,415
  1,496
Earnings before tax, $m
  4,930
  4,928
  5,575
  6,259
  6,979
  7,734
  8,523
  9,348
  10,207
  11,102
  12,033
  13,437
  14,442
  15,488
  16,574
  17,703
  18,876
  20,097
  21,367
  22,689
  24,066
  25,500
  26,995
  28,555
  30,182
  31,880
  33,654
  35,508
  37,445
  39,471
  41,590
Tax expense, $m
  1,335
  1,331
  1,505
  1,690
  1,884
  2,088
  2,301
  2,524
  2,756
  2,998
  3,249
  3,628
  3,899
  4,182
  4,475
  4,780
  5,097
  5,426
  5,769
  6,126
  6,498
  6,885
  7,289
  7,710
  8,149
  8,608
  9,087
  9,587
  10,110
  10,657
  11,229
Net income, $m
  3,595
  3,597
  4,070
  4,569
  5,095
  5,646
  6,222
  6,824
  7,451
  8,104
  8,784
  9,809
  10,543
  11,306
  12,099
  12,923
  13,780
  14,671
  15,598
  16,563
  17,568
  18,615
  19,706
  20,845
  22,033
  23,273
  24,568
  25,921
  27,335
  28,814
  30,361

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  3,490
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  16,431
  14,638
  16,437
  18,338
  20,338
  22,435
  24,630
  26,922
  29,311
  31,798
  34,386
  37,077
  39,873
  42,779
  45,799
  48,937
  52,200
  55,594
  59,124
  62,799
  66,626
  70,614
  74,770
  79,105
  83,628
  88,350
  93,281
  98,434
  103,819
  109,450
  115,340
Adjusted assets (=assets-cash), $m
  12,941
  14,638
  16,437
  18,338
  20,338
  22,435
  24,630
  26,922
  29,311
  31,798
  34,386
  37,077
  39,873
  42,779
  45,799
  48,937
  52,200
  55,594
  59,124
  62,799
  66,626
  70,614
  74,770
  79,105
  83,628
  88,350
  93,281
  98,434
  103,819
  109,450
  115,340
Revenue / Adjusted assets
  1.033
  1.033
  1.033
  1.033
  1.033
  1.033
  1.033
  1.033
  1.033
  1.033
  1.033
  1.033
  1.033
  1.033
  1.033
  1.033
  1.033
  1.033
  1.033
  1.033
  1.033
  1.033
  1.033
  1.033
  1.033
  1.033
  1.033
  1.033
  1.033
  1.033
  1.033
Average production assets, $m
  4,027
  4,552
  5,111
  5,702
  6,324
  6,976
  7,658
  8,371
  9,114
  9,887
  10,692
  11,528
  12,398
  13,301
  14,240
  15,216
  16,231
  17,286
  18,384
  19,526
  20,716
  21,956
  23,249
  24,596
  26,003
  27,471
  29,004
  30,606
  32,281
  34,032
  35,863
Working capital, $m
  5,193
  2,646
  2,971
  3,315
  3,677
  4,056
  4,452
  4,867
  5,299
  5,748
  6,216
  6,703
  7,208
  7,733
  8,279
  8,847
  9,436
  10,050
  10,688
  11,353
  12,044
  12,765
  13,517
  14,300
  15,118
  15,972
  16,863
  17,794
  18,768
  19,786
  20,851
Total debt, $m
  3,609
  3,682
  4,423
  5,206
  6,030
  6,894
  7,799
  8,743
  9,727
  10,752
  11,818
  12,927
  14,079
  15,276
  16,520
  17,813
  19,157
  20,556
  22,010
  23,524
  25,101
  26,744
  28,456
  30,242
  32,106
  34,051
  36,083
  38,206
  40,424
  42,744
  45,171
Total liabilities, $m
  5,958
  6,031
  6,772
  7,555
  8,379
  9,243
  10,148
  11,092
  12,076
  13,101
  14,167
  15,276
  16,428
  17,625
  18,869
  20,162
  21,506
  22,905
  24,359
  25,873
  27,450
  29,093
  30,805
  32,591
  34,455
  36,400
  38,432
  40,555
  42,773
  45,093
  47,520
Total equity, $m
  10,473
  8,607
  9,665
  10,783
  11,958
  13,192
  14,482
  15,830
  17,235
  18,697
  20,219
  21,801
  23,445
  25,154
  26,930
  28,775
  30,694
  32,689
  34,765
  36,926
  39,176
  41,521
  43,965
  46,514
  49,174
  51,950
  54,849
  57,879
  61,046
  64,357
  67,820
Total liabilities and equity, $m
  16,431
  14,638
  16,437
  18,338
  20,337
  22,435
  24,630
  26,922
  29,311
  31,798
  34,386
  37,077
  39,873
  42,779
  45,799
  48,937
  52,200
  55,594
  59,124
  62,799
  66,626
  70,614
  74,770
  79,105
  83,629
  88,350
  93,281
  98,434
  103,819
  109,450
  115,340
Debt-to-equity ratio
  0.345
  0.430
  0.460
  0.480
  0.500
  0.520
  0.540
  0.550
  0.560
  0.580
  0.580
  0.590
  0.600
  0.610
  0.610
  0.620
  0.620
  0.630
  0.630
  0.640
  0.640
  0.640
  0.650
  0.650
  0.650
  0.660
  0.660
  0.660
  0.660
  0.660
  0.670
Adjusted equity ratio
  0.540
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588
  0.588

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  3,595
  3,597
  4,070
  4,569
  5,095
  5,646
  6,222
  6,824
  7,451
  8,104
  8,784
  9,809
  10,543
  11,306
  12,099
  12,923
  13,780
  14,671
  15,598
  16,563
  17,568
  18,615
  19,706
  20,845
  22,033
  23,273
  24,568
  25,921
  27,335
  28,814
  30,361
Depreciation, amort., depletion, $m
  955
  953
  1,017
  1,084
  1,155
  1,229
  1,306
  1,387
  1,472
  1,560
  1,651
  1,310
  1,409
  1,512
  1,618
  1,729
  1,844
  1,964
  2,089
  2,219
  2,354
  2,495
  2,642
  2,795
  2,955
  3,122
  3,296
  3,478
  3,668
  3,867
  4,075
Funds from operations, $m
  4,668
  4,551
  5,087
  5,653
  6,249
  6,874
  7,528
  8,211
  8,923
  9,664
  10,435
  11,119
  11,952
  12,817
  13,717
  14,652
  15,624
  16,635
  17,687
  18,782
  19,922
  21,110
  22,348
  23,640
  24,987
  26,394
  27,864
  29,399
  31,003
  32,681
  34,436
Change in working capital, $m
  54
  307
  325
  344
  361
  379
  397
  414
  432
  450
  468
  486
  505
  525
  546
  567
  590
  613
  638
  664
  692
  721
  751
  784
  818
  854
  891
  931
  974
  1,018
  1,065
Cash from operations, $m
  4,614
  4,046
  4,762
  5,310
  5,888
  6,495
  7,132
  7,797
  8,491
  9,214
  9,967
  10,632
  11,446
  12,292
  13,171
  14,085
  15,034
  16,022
  17,049
  18,117
  19,230
  20,389
  21,597
  22,856
  24,170
  25,541
  26,972
  28,467
  30,030
  31,663
  33,371
Maintenance CAPEX, $m
  0
  -458
  -517
  -581
  -648
  -719
  -793
  -870
  -951
  -1,036
  -1,124
  -1,215
  -1,310
  -1,409
  -1,512
  -1,618
  -1,729
  -1,844
  -1,964
  -2,089
  -2,219
  -2,354
  -2,495
  -2,642
  -2,795
  -2,955
  -3,122
  -3,296
  -3,478
  -3,668
  -3,867
New CAPEX, $m
  -531
  -525
  -559
  -591
  -622
  -652
  -682
  -713
  -743
  -773
  -805
  -837
  -869
  -904
  -939
  -976
  -1,015
  -1,055
  -1,098
  -1,143
  -1,190
  -1,240
  -1,292
  -1,348
  -1,406
  -1,468
  -1,533
  -1,602
  -1,674
  -1,751
  -1,831
Cash from investing activities, $m
  -650
  -983
  -1,076
  -1,172
  -1,270
  -1,371
  -1,475
  -1,583
  -1,694
  -1,809
  -1,929
  -2,052
  -2,179
  -2,313
  -2,451
  -2,594
  -2,744
  -2,899
  -3,062
  -3,232
  -3,409
  -3,594
  -3,787
  -3,990
  -4,201
  -4,423
  -4,655
  -4,898
  -5,152
  -5,419
  -5,698
Free cash flow, $m
  3,964
  3,063
  3,685
  4,138
  4,618
  5,124
  5,657
  6,214
  6,797
  7,405
  8,039
  8,581
  9,267
  9,980
  10,721
  11,491
  12,291
  13,122
  13,987
  14,886
  15,821
  16,795
  17,809
  18,866
  19,968
  21,118
  22,317
  23,569
  24,877
  26,244
  27,673
Issuance/(repayment) of debt, $m
  -501
  704
  741
  783
  824
  864
  904
  944
  984
  1,025
  1,066
  1,108
  1,152
  1,197
  1,244
  1,293
  1,344
  1,398
  1,455
  1,514
  1,577
  1,643
  1,712
  1,786
  1,864
  1,945
  2,032
  2,123
  2,219
  2,320
  2,427
Issuance/(repurchase) of shares, $m
  -1,660
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -2,164
  704
  741
  783
  824
  864
  904
  944
  984
  1,025
  1,066
  1,108
  1,152
  1,197
  1,244
  1,293
  1,344
  1,398
  1,455
  1,514
  1,577
  1,643
  1,712
  1,786
  1,864
  1,945
  2,032
  2,123
  2,219
  2,320
  2,427
Total cash flow (excl. dividends), $m
  1,800
  3,767
  4,426
  4,921
  5,442
  5,989
  6,561
  7,158
  7,781
  8,430
  9,105
  9,689
  10,419
  11,177
  11,965
  12,784
  13,635
  14,520
  15,441
  16,400
  17,398
  18,438
  19,522
  20,652
  21,832
  23,063
  24,349
  25,692
  27,096
  28,564
  30,100
Retained Cash Flow (-), $m
  -527
  -993
  -1,058
  -1,117
  -1,176
  -1,233
  -1,291
  -1,348
  -1,405
  -1,463
  -1,522
  -1,582
  -1,644
  -1,709
  -1,776
  -1,845
  -1,919
  -1,995
  -2,076
  -2,161
  -2,250
  -2,345
  -2,444
  -2,549
  -2,660
  -2,776
  -2,900
  -3,030
  -3,167
  -3,311
  -3,463
Prev. year cash balance distribution, $m
 
  2,859
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  5,633
  3,368
  3,804
  4,266
  4,755
  5,270
  5,811
  6,377
  6,968
  7,584
  8,107
  8,775
  9,468
  10,189
  10,938
  11,716
  12,525
  13,365
  14,239
  15,148
  16,093
  17,078
  18,103
  19,172
  20,287
  21,449
  22,663
  23,930
  25,253
  26,636
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  5,401
  3,084
  3,310
  3,513
  3,686
  3,825
  3,926
  3,986
  4,002
  3,976
  3,850
  3,744
  3,600
  3,421
  3,211
  2,977
  2,725
  2,461
  2,192
  1,925
  1,665
  1,417
  1,187
  976
  789
  626
  486
  370
  276
  201
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Texas Instruments Incorporated designs, manufactures, and sells semiconductors to electronics designers and manufacturers worldwide. The company operates through two segments, Analog and Embedded Processing. The Analog segment offers high volume analog and logic products for automotive safety devices, touch screen controllers, low voltage motor drivers, and integrated motor controllers; and power products to manage power requirements using battery management solutions, portable power components, power supply controls, and point-of-load products. This segment also provides high performance analog products, such as high-speed data converters, amplifiers, sensors, high reliability products, interface products, and precision products; and silicon valley analog products, including power management, data converter, interface, and operational amplifier products that are used in manufacturing various electronic systems. The Embedded Processing segment offers processors, including digital signal processors and applications processors; microcontrollers, such as self-contained systems with a processor core, memory, and peripherals that are designed to control a set of specific tasks for electronic equipment; and connectivity products that enable electronic equipment to connect and transfer data wirelessly. It also provides DLP products primarily used in projectors to create high-definition images; calculators; and application-specific integrated circuits. The company markets and sells its semiconductor products through direct sales and distributors, as well as online. Texas Instruments Incorporated was founded in 1930 and is headquartered in Dallas, Texas.

FINANCIAL RATIOS  of  Texas Instruments (TXN)

Valuation Ratios
P/E Ratio 22.5
Price to Sales 6
Price to Book 7.7
Price to Tangible Book
Price to Cash Flow 17.5
Price to Free Cash Flow 19.8
Growth Rates
Sales Growth Rate 2.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -3.6%
Cap. Spend. - 3 Yr. Gr. Rate 5.2%
Financial Strength
Quick Ratio 6
Current Ratio 0
LT Debt to Equity 28.4%
Total Debt to Equity 34.5%
Interest Coverage 0
Management Effectiveness
Return On Assets 22%
Ret/ On Assets - 3 Yr. Avg. 18.4%
Return On Total Capital 25.5%
Ret/ On T. Cap. - 3 Yr. Avg. 21.4%
Return On Equity 35.2%
Return On Equity - 3 Yr. Avg. 30.4%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 61.6%
Gross Margin - 3 Yr. Avg. 58.9%
EBITDA Margin 44%
EBITDA Margin - 3 Yr. Avg. 41.4%
Operating Margin 35.9%
Oper. Margin - 3 Yr. Avg. 33%
Pre-Tax Margin 36.9%
Pre-Tax Margin - 3 Yr. Avg. 33%
Net Profit Margin 26.9%
Net Profit Margin - 3 Yr. Avg. 23.8%
Effective Tax Rate 27.1%
Eff/ Tax Rate - 3 Yr. Avg. 27.8%
Payout Ratio 45.8%

TXN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the TXN stock intrinsic value calculation we used $13370 million for the last fiscal year's total revenue generated by Texas Instruments. The default revenue input number comes from 2016 income statement of Texas Instruments. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our TXN stock valuation model: a) initial revenue growth rate of 13.1% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for TXN is calculated based on our internal credit rating of Texas Instruments, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Texas Instruments.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of TXN stock the variable cost ratio is equal to 67.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for TXN stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Texas Instruments.

Corporate tax rate of 27% is the nominal tax rate for Texas Instruments. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the TXN stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for TXN are equal to 30.1%.

Life of production assets of 8.8 years is the average useful life of capital assets used in Texas Instruments operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for TXN is equal to 17.5%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $10473 million for Texas Instruments - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 1000.87 million for Texas Instruments is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Texas Instruments at the current share price and the inputted number of shares is $81.2 billion.


Premium access subscription - $499/yr

please register and log in before paying
RELATED COMPANIES Price Int.Val. Rating
ADI Analog Devices 82.81 prem.  prem.
MXIM Maxim Integrat 47.70 prem.  prem.
ON ON Semiconduct 15.49 prem.  prem.
NXPI NXP Semiconduc 108.00 prem.  prem.
MCHP Microchip Tech 81.70 prem.  prem.
INTC Intel 36.26 prem.  prem.
STM STMicroelectro 16.50 prem.  prem.

COMPANY NEWS

▶ Stocks Steady At Highs: These 3 Apple Chip Plays Are Near Buys   [06:20AM  Investor's Business Daily]
▶ [$$] TI's Four Core Advantages   [May-25-17 07:39AM  Barrons.com]
▶ 5 Leadership Lessons From Exceptionally Successful CEOs   [May-21-17 12:22PM  Motley Fool]
▶ Texas Instruments targets self-driving cars, more with sensor debut   [May-17-17 02:00PM  American City Business Journals]
▶ With Intel Down Big, Is Trouble Ahead for Semis?   [Apr-28-17 02:56PM  TheStreet.com]
▶ Texas Instruments, Macom Technology Get Upbeat Analyst Reviews   [04:37PM  Investor's Business Daily]
▶ Story Stocks from Briefing.com   [12:08PM  Briefing.com]
▶ Texas Instruments tops Street 1Q forecasts   [04:42PM  Associated Press]
▶ Texas Instruments board declares quarterly dividend   [Apr-19-17 05:35PM  PR Newswire]
▶ Stock Futures Show Market Tests Aren't Over: 4 Top Techs That Passed   [Apr-12-17 06:55AM  Investor's Business Daily]
▶ Should you buy chip stocks on the dip?   [Apr-11-17 02:33PM  CNBC Videos]
▶ Trouble Ahead for Texas Instruments?   [10:57AM  TheStreet.com]
▶ 3 "Internet of Things" Stocks to Buy Now   [Apr-04-17 05:46PM  Zacks]
▶ TI recognizes 16 suppliers for excellence   [09:00AM  PR Newswire]
▶ 3 Top Apple Suppliers to Buy in 2017   [Apr-01-17 02:10PM  Motley Fool]
▶ Top Research Reports for Today: DIS, TXN, LMT   [Mar-31-17 04:41PM  Zacks]
▶ The 5 Best Dividend Stocks in Apple Suppliers   [Mar-25-17 09:22AM  at Motley Fool]
▶ [$$] TI Tops Intel, Qualcomm in Cash-Flow Growth   [Mar-16-17 12:40PM  at Barrons.com]
▶ Texas Instruments Should Ride Even Higher   [Mar-14-17 10:00AM  at TheStreet]
Stock chart of TXN Financial statements of TXN Annual reports of TXN
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

FREE DOWNLOAD
Follow us on:   twitter   twitter   twitter   twitter

VALUATION THEORY       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2017. All rigths reserved.