Intrinsic value of Texas Instruments - TXN

Previous Close

$109.40

  Intrinsic Value

$144.87

stock screener

  Rating & Target

buy

+32%

Previous close

$109.40

 
Intrinsic value

$144.87

 
Up/down potential

+32%

 
Rating

buy

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 2017), $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 108.4

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   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
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  11.90
  11.21
  10.59
  10.03
  9.53
  9.07
  8.67
  8.30
  7.97
  7.67
  7.41
  7.17
  6.95
  6.75
  6.58
  6.42
  6.28
  6.15
  6.04
  5.93
  5.84
  5.75
  5.68
  5.61
  5.55
  5.50
  5.45
  5.40
  5.36
  5.32
Revenue, $m
  16,741
  18,618
  20,590
  22,655
  24,813
  27,065
  29,410
  31,851
  34,390
  37,029
  39,771
  42,621
  45,583
  48,661
  51,862
  55,192
  58,658
  62,265
  66,024
  69,940
  74,024
  78,284
  82,730
  87,372
  92,222
  97,290
  102,588
  108,129
  113,926
  119,993
Variable operating expenses, $m
  3,753
  4,112
  4,491
  4,887
  5,301
  5,732
  6,182
  6,650
  7,137
  7,643
  7,628
  8,174
  8,742
  9,333
  9,946
  10,585
  11,250
  11,942
  12,662
  13,414
  14,197
  15,014
  15,866
  16,757
  17,687
  18,659
  19,675
  20,738
  21,849
  23,013
Fixed operating expenses, $m
  5,708
  5,833
  5,962
  6,093
  6,227
  6,364
  6,504
  6,647
  6,793
  6,943
  7,096
  7,252
  7,411
  7,574
  7,741
  7,911
  8,085
  8,263
  8,445
  8,631
  8,820
  9,015
  9,213
  9,416
  9,623
  9,834
  10,051
  10,272
  10,498
  10,729
Total operating expenses, $m
  9,461
  9,945
  10,453
  10,980
  11,528
  12,096
  12,686
  13,297
  13,930
  14,586
  14,724
  15,426
  16,153
  16,907
  17,687
  18,496
  19,335
  20,205
  21,107
  22,045
  23,017
  24,029
  25,079
  26,173
  27,310
  28,493
  29,726
  31,010
  32,347
  33,742
Operating income, $m
  7,281
  8,672
  10,137
  11,675
  13,285
  14,968
  16,724
  18,554
  20,459
  22,443
  25,048
  27,195
  29,429
  31,754
  34,175
  36,696
  39,323
  42,061
  44,916
  47,896
  51,007
  54,256
  57,651
  61,200
  64,912
  68,797
  72,862
  77,120
  81,579
  86,251
EBITDA, $m
  8,733
  10,227
  11,799
  13,449
  15,177
  16,982
  18,866
  20,828
  22,872
  24,999
  27,212
  29,514
  31,909
  34,402
  36,996
  39,698
  42,514
  45,448
  48,508
  51,701
  55,034
  58,514
  62,151
  65,953
  69,929
  74,089
  78,443
  83,002
  87,776
  92,779
Interest expense (income), $m
  0
  193
  237
  283
  331
  382
  435
  490
  548
  608
  670
  735
  802
  872
  945
  1,020
  1,099
  1,181
  1,266
  1,354
  1,447
  1,543
  1,643
  1,748
  1,857
  1,971
  2,090
  2,214
  2,344
  2,480
  2,623
Earnings before tax, $m
  7,088
  8,435
  9,854
  11,344
  12,904
  14,533
  16,234
  18,006
  19,852
  21,773
  24,313
  26,393
  28,557
  30,810
  33,155
  35,597
  38,142
  40,795
  43,562
  46,449
  49,464
  52,613
  55,903
  59,343
  62,942
  66,707
  70,648
  74,775
  79,098
  83,628
Tax expense, $m
  1,914
  2,278
  2,661
  3,063
  3,484
  3,924
  4,383
  4,862
  5,360
  5,879
  6,565
  7,126
  7,710
  8,319
  8,952
  9,611
  10,298
  11,015
  11,762
  12,541
  13,355
  14,205
  15,094
  16,023
  16,994
  18,011
  19,075
  20,189
  21,357
  22,580
Net income, $m
  5,174
  6,158
  7,194
  8,281
  9,420
  10,609
  11,851
  13,145
  14,492
  15,894
  17,749
  19,267
  20,847
  22,491
  24,203
  25,986
  27,844
  29,780
  31,800
  33,908
  36,109
  38,407
  40,809
  43,321
  45,947
  48,696
  51,573
  54,586
  57,742
  61,049

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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 assets, $m
  17,259
  19,194
  21,226
  23,355
  25,580
  27,902
  30,320
  32,837
  35,454
  38,174
  41,001
  43,939
  46,992
  50,166
  53,466
  56,899
  60,472
  64,191
  68,065
  72,103
  76,313
  80,705
  85,289
  90,075
  95,074
  100,299
  105,761
  111,473
  117,450
  123,704
Adjusted assets (=assets-cash), $m
  17,259
  19,194
  21,226
  23,355
  25,580
  27,902
  30,320
  32,837
  35,454
  38,174
  41,001
  43,939
  46,992
  50,166
  53,466
  56,899
  60,472
  64,191
  68,065
  72,103
  76,313
  80,705
  85,289
  90,075
  95,074
  100,299
  105,761
  111,473
  117,450
  123,704
Revenue / Adjusted assets
  0.970
  0.970
  0.970
  0.970
  0.970
  0.970
  0.970
  0.970
  0.970
  0.970
  0.970
  0.970
  0.970
  0.970
  0.970
  0.970
  0.970
  0.970
  0.970
  0.970
  0.970
  0.970
  0.970
  0.970
  0.970
  0.970
  0.970
  0.970
  0.970
  0.970
Average production assets, $m
  9,107
  10,128
  11,201
  12,324
  13,498
  14,723
  15,999
  17,327
  18,708
  20,144
  21,636
  23,186
  24,797
  26,472
  28,213
  30,025
  31,910
  33,872
  35,917
  38,047
  40,269
  42,586
  45,005
  47,531
  50,169
  52,926
  55,808
  58,822
  61,976
  65,276
Working capital, $m
  1,674
  1,862
  2,059
  2,265
  2,481
  2,706
  2,941
  3,185
  3,439
  3,703
  3,977
  4,262
  4,558
  4,866
  5,186
  5,519
  5,866
  6,227
  6,602
  6,994
  7,402
  7,828
  8,273
  8,737
  9,222
  9,729
  10,259
  10,813
  11,393
  11,999
Total debt, $m
  4,383
  5,237
  6,133
  7,072
  8,053
  9,077
  10,143
  11,253
  12,407
  13,607
  14,854
  16,149
  17,496
  18,895
  20,351
  21,865
  23,440
  25,080
  26,789
  28,570
  30,426
  32,363
  34,384
  36,495
  38,700
  41,004
  43,413
  45,932
  48,567
  51,325
Total liabilities, $m
  7,611
  8,465
  9,361
  10,300
  11,281
  12,305
  13,371
  14,481
  15,635
  16,835
  18,082
  19,377
  20,724
  22,123
  23,579
  25,093
  26,668
  28,308
  30,017
  31,798
  33,654
  35,591
  37,612
  39,723
  41,928
  44,232
  46,641
  49,160
  51,795
  54,553
Total equity, $m
  9,648
  10,729
  11,866
  13,056
  14,299
  15,597
  16,949
  18,356
  19,819
  21,339
  22,920
  24,562
  26,269
  28,043
  29,888
  31,807
  33,804
  35,883
  38,049
  40,306
  42,659
  45,114
  47,676
  50,352
  53,146
  56,067
  59,120
  62,314
  65,654
  69,150
Total liabilities and equity, $m
  17,259
  19,194
  21,227
  23,356
  25,580
  27,902
  30,320
  32,837
  35,454
  38,174
  41,002
  43,939
  46,993
  50,166
  53,467
  56,900
  60,472
  64,191
  68,066
  72,104
  76,313
  80,705
  85,288
  90,075
  95,074
  100,299
  105,761
  111,474
  117,449
  123,703
Debt-to-equity ratio
  0.450
  0.490
  0.520
  0.540
  0.560
  0.580
  0.600
  0.610
  0.630
  0.640
  0.650
  0.660
  0.670
  0.670
  0.680
  0.690
  0.690
  0.700
  0.700
  0.710
  0.710
  0.720
  0.720
  0.720
  0.730
  0.730
  0.730
  0.740
  0.740
  0.740
Adjusted equity ratio
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  5,174
  6,158
  7,194
  8,281
  9,420
  10,609
  11,851
  13,145
  14,492
  15,894
  17,749
  19,267
  20,847
  22,491
  24,203
  25,986
  27,844
  29,780
  31,800
  33,908
  36,109
  38,407
  40,809
  43,321
  45,947
  48,696
  51,573
  54,586
  57,742
  61,049
Depreciation, amort., depletion, $m
  1,453
  1,555
  1,662
  1,774
  1,892
  2,014
  2,142
  2,275
  2,413
  2,556
  2,164
  2,319
  2,480
  2,647
  2,821
  3,002
  3,191
  3,387
  3,592
  3,805
  4,027
  4,259
  4,501
  4,753
  5,017
  5,293
  5,581
  5,882
  6,198
  6,528
Funds from operations, $m
  6,627
  7,712
  8,856
  10,055
  11,311
  12,623
  13,992
  15,419
  16,904
  18,450
  19,912
  21,586
  23,327
  25,138
  27,024
  28,988
  31,035
  33,168
  35,392
  37,713
  40,136
  42,666
  45,310
  48,074
  50,964
  53,989
  57,154
  60,468
  63,939
  67,576
Change in working capital, $m
  178
  188
  197
  207
  216
  225
  235
  244
  254
  264
  274
  285
  296
  308
  320
  333
  347
  361
  376
  392
  408
  426
  445
  464
  485
  507
  530
  554
  580
  607
Cash from operations, $m
  6,449
  7,525
  8,658
  9,849
  11,095
  12,398
  13,758
  15,175
  16,651
  18,186
  19,638
  21,301
  23,030
  24,830
  26,704
  28,655
  30,688
  32,807
  35,016
  37,321
  39,727
  42,240
  44,865
  47,609
  50,479
  53,482
  56,624
  59,914
  63,360
  66,970
Maintenance CAPEX, $m
  -814
  -911
  -1,013
  -1,120
  -1,232
  -1,350
  -1,472
  -1,600
  -1,733
  -1,871
  -2,014
  -2,164
  -2,319
  -2,480
  -2,647
  -2,821
  -3,002
  -3,191
  -3,387
  -3,592
  -3,805
  -4,027
  -4,259
  -4,501
  -4,753
  -5,017
  -5,293
  -5,581
  -5,882
  -6,198
New CAPEX, $m
  -971
  -1,021
  -1,072
  -1,123
  -1,174
  -1,225
  -1,276
  -1,328
  -1,381
  -1,436
  -1,492
  -1,550
  -1,611
  -1,675
  -1,741
  -1,811
  -1,885
  -1,963
  -2,044
  -2,131
  -2,222
  -2,317
  -2,419
  -2,525
  -2,638
  -2,757
  -2,882
  -3,014
  -3,154
  -3,300
Cash from investing activities, $m
  -1,785
  -1,932
  -2,085
  -2,243
  -2,406
  -2,575
  -2,748
  -2,928
  -3,114
  -3,307
  -3,506
  -3,714
  -3,930
  -4,155
  -4,388
  -4,632
  -4,887
  -5,154
  -5,431
  -5,723
  -6,027
  -6,344
  -6,678
  -7,026
  -7,391
  -7,774
  -8,175
  -8,595
  -9,036
  -9,498
Free cash flow, $m
  4,664
  5,593
  6,573
  7,605
  8,689
  9,824
  11,010
  12,247
  13,537
  14,880
  16,132
  17,587
  19,101
  20,676
  22,316
  24,023
  25,801
  27,653
  29,584
  31,599
  33,701
  35,895
  38,188
  40,583
  43,088
  45,708
  48,449
  51,319
  54,324
  57,472
Issuance/(repayment) of debt, $m
  806
  853
  896
  939
  981
  1,024
  1,066
  1,110
  1,154
  1,200
  1,247
  1,296
  1,346
  1,400
  1,455
  1,514
  1,575
  1,640
  1,709
  1,781
  1,857
  1,937
  2,021
  2,111
  2,205
  2,304
  2,409
  2,519
  2,636
  2,758
Issuance/(repurchase) of shares, $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 from financing (excl. dividends), $m  
  806
  853
  896
  939
  981
  1,024
  1,066
  1,110
  1,154
  1,200
  1,247
  1,296
  1,346
  1,400
  1,455
  1,514
  1,575
  1,640
  1,709
  1,781
  1,857
  1,937
  2,021
  2,111
  2,205
  2,304
  2,409
  2,519
  2,636
  2,758
Total cash flow (excl. dividends), $m
  5,470
  6,446
  7,469
  8,544
  9,670
  10,847
  12,076
  13,357
  14,691
  16,080
  17,379
  18,882
  20,447
  22,076
  23,771
  25,536
  27,376
  29,293
  31,293
  33,379
  35,557
  37,832
  40,209
  42,694
  45,293
  48,012
  50,858
  53,838
  56,960
  60,230
Retained Cash Flow (-), $m
  -1,022
  -1,082
  -1,136
  -1,190
  -1,244
  -1,298
  -1,352
  -1,407
  -1,463
  -1,521
  -1,580
  -1,642
  -1,707
  -1,774
  -1,845
  -1,919
  -1,997
  -2,079
  -2,166
  -2,257
  -2,353
  -2,455
  -2,562
  -2,675
  -2,795
  -2,921
  -3,053
  -3,193
  -3,341
  -3,496
Prev. year cash balance distribution, $m
  1,711
  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
  239
  268
  298
  329
  362
  397
  433
  471
  510
  550
  592
  636
  682
  729
  779
  830
  883
  939
  996
  1,056
  1,119
  1,184
  1,253
  1,324
  1,398
  1,476
  1,557
  1,641
  1,730
  1,823
Cash available for distribution, $m
  6,159
  5,365
  6,333
  7,354
  8,426
  9,550
  10,724
  11,950
  13,228
  14,559
  15,798
  17,240
  18,740
  20,301
  21,926
  23,617
  25,379
  27,214
  29,127
  31,122
  33,204
  35,377
  37,647
  40,019
  42,498
  45,091
  47,805
  50,645
  53,619
  56,734
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
  5,905
  4,911
  5,512
  6,055
  6,531
  6,931
  7,245
  7,469
  7,599
  7,633
  7,502
  7,357
  7,125
  6,816
  6,437
  6,002
  5,522
  5,012
  4,485
  3,955
  3,434
  2,935
  2,467
  2,038
  1,653
  1,316
  1,026
  784
  585
  427
Current shareholders' claim on cash, %
  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, 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.

FINANCIAL RATIOS  of  Texas Instruments (TXN)

Valuation Ratios
P/E Ratio 30.3
Price to Sales 8.1
Price to Book 10.4
Price to Tangible Book
Price to Cash Flow 23.6
Price to Free Cash Flow 26.7
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 $14961 million for the last fiscal year's total revenue generated by Texas Instruments. The default revenue input number comes from 2017 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 11.9% 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 22.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $5585 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 5.4% 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 1.6%.

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 54.4%.

Life of production assets of 10 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 10%. 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 - $10337 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 991 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 $108.4 billion.

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COMPANY NEWS

▶ Does Tax-Net SA (WSE:TXN) Go Up With The Market?   [Aug-15-18 08:59AM  Simply Wall St.]
▶ Texas Instruments Is Ready to Breakout but Wait For It   [Aug-13-18 03:35PM  TheStreet.com]
▶ Texas Instruments Falls 3.09%   [Aug-10-18 01:06PM  Investing.com]
▶ Which Stocks Are The Best Mutual Funds Buying? Here's The Latest List   [Aug-07-18 04:05PM  Investor's Business Daily]
▶ [$$] Big Pay, Short Stays for Hardware Chiefs   [Aug-05-18 07:42PM  The Wall Street Journal]
▶ [$$] Big Pay, Short Stays for Hardware Chiefs   [Aug-04-18 09:50AM  The Wall Street Journal]
▶ Better Buy: Intel Corporation vs. Texas Instruments   [Jul-29-18 02:00PM  Motley Fool]
▶ Pairing Up Semiconductor Stocks: TXN and INTC Trades   [Jul-26-18 11:20AM  InvestorPlace]
▶ Texas Instruments -- Nothing to See Here   [01:13PM  The Wall Street Journal]
▶ Texas Instruments' Templeton 'fully engaged' in CEO role again   [07:49AM  American City Business Journals]
▶ [$$] Texas Instruments Forecasts Strong Third Quarter   [Jul-24-18 08:07PM  The Wall Street Journal]
▶ [$$] Texas Instruments Forecasts Strong Third Quarter   [05:33PM  The Wall Street Journal]
▶ Texas Instruments: 2Q Earnings Snapshot   [04:15PM  Associated Press]
▶ 3 Tech Stocks for Dividend Investors to Buy Now   [Jul-20-18 02:50PM  Zacks]
▶ 4 Top Stocks in Semiconductors   [10:22AM  Motley Fool]
▶ [$$] Where did all the chief executives go (and so quietly)?   [Jul-19-18 11:30PM  Financial Times]
▶ Are CEOs Really Worth What Theyre Paid?   [07:00AM  InvestorPlace]
▶ Texas Instruments CEO Resigns   [11:11AM  Investopedia]
▶ Texas Instruments CEO resigns   [09:30AM  Fox Business Videos]
▶ Whats News: Business & Finance   [12:04AM  The Wall Street Journal]
▶ [$$] Texas Instruments CEO Resigns After Code of Conduct Violations   [Jul-17-18 10:49PM  The Wall Street Journal]
▶ Tech Stocks to Take Hit in Any US-China Trade War   [Jul-16-18 11:07AM  Investopedia]
▶ U.S. lifts ban on suppliers selling to China's ZTE   [Jul-13-18 02:08PM  Reuters]
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