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TXN — Texas Instruments

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2. Company Fundamentals

2.1 Competitiveness

Metric Value
Operating Margins 37.82%
Profit Margins 29.11%
Return on Equity 32.35%
Return on Assets 12.16%
Free Float 0.91B
Dividend Yield 1.99%
Short Int % Utilisation 2.32%

2.2 Growth

Metric Value
Revenue Growth 18.6%
Free Cash Flow 1.07B
EBITDA 30.65 (Ratio)
Enterprise Value 265.6B
EV/Revenue 14.4
EV/EBITDA 30.65

Revenue growth of 18.6% indicates steady, moderate expansion.

2.3 Management

Role Metric
Consensus Rating N/A

2.4 Return

Metric Value
Expected Return (Ann.)* 61.23%
Risk / Std Dev (Ann.)* 42.27%
1-Year Price Return* 47.41%

Latest Market Data (as of 2026-08-14, US Eastern time):

Metric Value
Last Price $279.58
52-Week Range $152.73 – $334.03
Observation Count 251 trading days

The return and risk statistics use daily adjusted closes from the retrieved one-year series and annualise daily moments using 252 trading days. The last price is the latest regular-market price reported for the stated date. Source: Yahoo Finance market data.

DuPont Model Analysis

The DuPont model decomposes return on equity (ROE) into three operating and capital-structure drivers:

ROE = Net Margin × Asset Turnover × Equity Multiplier

The comparison uses the latest two comparable annual periods available for the issuer, with reported statement amounts shown in US$. Revenue and net income are income-statement flows; total assets and shareholders’ equity are year-end balance-sheet figures. This is a simplified year-end-balance DuPont comparison rather than an average-balance ROE calculation.

DuPont component Calculation FY2025 FY2024
Revenue Reported revenue $17.68B $15.64B
Net income Reported net income $4.97B $4.78B
Total assets Year-end reported balance $34.59B $35.51B
Shareholders’ equity Year-end reported balance $16.27B $16.90B
Net margin Net income ÷ revenue 28.12% 30.53%
Asset turnover Revenue ÷ total assets 0.5113x 0.4405x
Equity multiplier Total assets ÷ shareholders’ equity 2.1253x 2.1008x
ROE Net margin × asset turnover × equity multiplier 30.56% 28.25%

Source: Yahoo Finance annual statements. Values are based on the two latest comparable annual periods returned by the source; fiscal period labels use the statement period-end year.

2.5 FCFF DCF Valuation

Valuation basis: This research model follows a five-year, unlevered FCFF DCF. It starts from reported annual operating inputs, forecasts revenue and operating cash conversion under an explicit mechanical policy, discounts FCFF at WACC, applies a Gordon-growth terminal value, and bridges enterprise value to an indicative common-equity value per share. It is an analytical estimate rather than a recommendation or personalised target price.

Step 1 — Forecast Operating Profit and NOPAT

Reported operating input Value
Revenue $17.68B
Prior annual revenue $15.64B
EBIT $6.25B
Tax rate 12.40%
NOPAT = EBIT × (1 − tax rate) $5.48B
Forecast start-growth basis 13.05%
Forecast policy latest reported annual revenue growth, bounded to -10.00% / 15.00%

Step 2 — Calculate FCFF

Current FCFF building block Value
NOPAT $5.48B
Add: depreciation & amortisation $2.00B
Less: capital expenditure -$4.55B
Less/(add): working-capital cash-flow movement -$271.00M
Current unlevered FCFF $2.66B

Explicit FCFF forecast

Forecast year Revenue growth NOPAT D&A Capex Change in NWC FCFF Present value
1 13.05% $6.19B $2.26B -$5.14B -$306.36M $3.00B $2.84B
2 10.41% $6.84B $2.50B -$4.88B -$338.26M $4.11B $3.49B
3 7.77% $7.37B $2.69B -$4.40B -$364.56M $5.29B $4.02B
4 5.14% $7.75B $2.83B -$3.73B -$383.29M $6.46B $4.41B
5 2.50% $7.94B $2.90B -$2.90B -$392.87M $7.55B $4.62B

Step 3 — Determine the Discount Rate (WACC)

WACC input Value
Risk-free rate 4.71%
Equity risk premium assumption 5.50%
Beta 1.32
Cost of equity 12.00%
Pre-tax cost of debt 3.93%
WACC 11.54%
WACC validation within standard range

Step 4 — Estimate Terminal Value

Terminal-value input Value
Perpetuity growth rate 2.50%
Terminal value $85.58B
Implied terminal EV / EBITDA 7.15x
Terminal value as % of enterprise value 71.89%

Step 5 — Discount Cash Flows to Enterprise Value

Enterprise-value component Value
Present value of explicit FCFF $19.38B
Present value of terminal value $49.57B
Indicated enterprise value $68.96B
Discounting convention mid-year for explicit FCFF; terminal value discounted at year-end five

Step 6 — Convert Enterprise Value to Equity Value

Equity bridge Value
Indicated enterprise value $68.96B
Less: gross interest-bearing debt $14.05B
Add: cash and equivalents $4.88B
Add: affiliate investments $0.00
Less: minority interests $0.00
Indicated common equity value $59.79B

Step 7 — Calculate Indicative Value Per Share

Per-share output Value
Shares used 913,000,000.00
Share-count basis reported diluted weighted-average shares
Current market price $271.08
DCF indicative value per share $65.49
Indicative value vs. market price -75.84%

Model Integrity Checks

Check Result
Perpetuity growth is below the risk-free rate pass
Perpetuity growth is below WACC pass
WACC is within the configured operating-company range pass
Terminal-year FCFF is positive pass
Terminal capex converges to D&A pass
Terminal-value concentration within review band
Implied price differs from spot by more than 30% review required

2.6 Investor-Style Research Screen

Educational screen Result
Buffett-inspired cash-quality checks 3/4 evidenced checks
Lynch-inspired balance-and-growth checks 4/4 evidenced checks

Data lineage: Yahoo Finance public market and reported-statement data; retrieval timestamp: 2026-08-18 17:52:06.520334 UTC; latest reported fiscal period: 2025-12-31 00:00:00. Default assumptions: five-year forecast, mid-year discounting for explicit FCFF, a maximum 2.50% perpetuity-growth rate below both WACC and the risk-free rate, historical operating-ratio persistence, and capex convergence to D&A by year five. No sell-side consensus or management guidance is substituted for reported inputs. This is research and analysis only, not personalized financial advice.

2.7 Quantitative Factor Diagnostics

Model basis: Daily issuer USD excess returns are regressed in-sample using ordinary least squares on matching regional Fama–French factors. FF3 estimates market, size, and value loadings; FF5 adds profitability and investment. Coefficients are descriptive historical exposures, not predictions.

Estimation input Value
Regional factor set US
Factor-return currency USD
Issuer-return basis USD adjusted total return
Estimation window 2025-08-19 to 2026-06-30
Aligned daily observations 217
Minimum observation requirement 120
Currency conversion for HK listings not required

Fama–French Three-Factor and Five-Factor Results

Diagnostic FF3 FF5
Annualised alpha 13.72% 1.03%
Adjusted R² 0.21 0.25
Annualised residual volatility 37.98% 36.76%
Factor loading (t-statistic) FF3 FF5
Market excess return (Mkt-RF) 1.66 (7.41) 1.46 (5.87)
Size (SMB) -0.35 (-1.16) -0.76 (-2.41)
Value (HML) 1.13 (4.35) 0.84 (2.72)
Profitability (RMW) NM -0.86 (-3.27)
Investment (CMA) NM 1.17 (2.56)

Definitions: Mkt-RF is the market return less the risk-free rate; SMB is small minus big; HML is high minus low book-to-market; RMW is robust minus weak profitability; CMA is conservative minus aggressive investment. Factor returns are sourced from the Kenneth R. French Data Library; issuer adjusted-return history is sourced from Yahoo Finance. For Hong Kong listings, adjusted HKD prices are converted into USD with daily USD/HKD closes before return calculation to match the USD regional factor basis. This is an in-sample historical regression; coefficients and t-statistics do not establish causation or predict future returns. This is research and analysis only, not personalized financial advice.

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