TXN: Texas Instruments
The company sells and designs semiconductors, serving communications, computing, industrial, consumer electronics, automotive, and education sectors. It also designs, manufactures, and sells wireless application processors and connectivity products. Plus, its name is on several handheld retail graphing and scientific calculators.
Recent Range: $15/share – $38/share (Current Price: 33.91, as of close of 1/19/11)
Price/Sales (P/S) = 2.96 (2.70, Industry)
Price/Book (P/B) = 4.00 (3.08)
Price/Earnings (P/E) = 14.3 (15.6)
Gross Profit Margin = 53.6% (58.7%)
Pre-Tax Profit Margin = 31.1% (29.0%)
Net Profit Margin = 21.9% (20.9%)
Debt/Equity Ratio = 0.00 (0.17)
Current Ratio = 3.5 (3.4)
Return on Equity = 30.0% (24.8%)
Return on Assets = 24.0% (17.4%)
Analysis: This company is really well known, and people that I know who work within this field indicate that this company is doing some really good things. However, while the stock price might rise, it is not an obvious buy to me.
I know that in my personal circles, Texas Instruments represents an industry standard, if not higher, quality. So the perception is there, at the very least. That never hurts a company. In fact, potentially, it gives it room to charge a little more for the same thing, potentially providing a profit cushion that their competitors cannot use.
They have always been known to spend on research and development (R&D), but this is probably a given within their technology industry.
A company that size carrying no debt is impressive. However, they seem to use it only as an equalizer since their pre-tax margin seems to be about the same as the industry average. Their current ratio is basically the same as their competition.
They seem to provide a higher return on their investments for their investors.
The economy seems to be headed for a nationwide turnaround (some regions notwithstanding), and more people are likely to have discretionary income to spend on retail technology products. Many manufacturers are spending more, already.
The company is expected to release an earnings report on Monday (1/24/11), and they are expected to post a nice profit.
I am not very good at guessing short-term stock prices, but there could be some potential to make money by trading in the morning and selling shortly after the earnings announcement.
However, this is not a sure bet to me. It seems like the price could rise, but today’s price seems to be about what I would expect to pay for stock in this company. It’s not a total ripoff, but it does not seem to be a bargain to me, either.
Anyone buying this stock is either responding to the company name, the upcoming earnings report, or it sees this as a growth stock. It definitely is not a value stock.