Texas Instruments Incorporated TXN
Verdict: Sell. Fair value $170 against a price of $192 on 6 Jan 2026, 12% below the price.
In plain words
The case for: Wide competitive moat provides durability. Market leadership enables pricing power. Industry tailwinds with growing market.
The case against: Intense competitive pressure could compress margins. Revenue has declined sharply from $20.03B in 2022 to $15.64B in 2024, a 22% drop. Net Income has.... The OCF/Net Income ratio improved to a strong 1.32 in 2024. However, this is not due to strong cash....
Main risks
- Severe FCF Collapse: Free cash flow has plummeted from ~$6B in 2021-2022 to $1.5B in 2024, driven by a massive increase in CapEx ($4.82B TTM) that now consumes ~70% of operating cash flow.
- Negative Returns on Investment (Severe Red Flag): Estimated 3-year ROIIC is -34.8%, indicating that the significant recent capital investments have coincided with a sharp decline in earnings, suggesting value destruction.
- Steep Revenue and Profit Decline: Revenue has contracted significantly from $20.0B in 2022 to $15.6B in 2024, with net income falling from $8.75B to $4.80B over the same period, signaling a deep cyclical downturn or loss of competitive edge.
- Revenue has declined sharply from $20.03B in 2022 to $15.64B in 2024, a 22% drop. Net Income has...
- The OCF/Net Income ratio improved to a strong 1.32 in 2024. However, this is not due to strong cash...
- Intense competitive environment