Texas Instruments Incorporated (TXN)
Valuation Overview•Is Texas Instruments Incorporated Overvalued or Undervalued?
Market price has outpaced base-case intrinsic cash flows, pricing in significant future growth optimism.
High-quality fundamentals with a strong composite quality score of 80/100, backed by robust profitability and solvency.
Analysts remain cautious, with consensus price targets indicating limited room for upside expansion.
Verdict: High-quality compounder, with growth as the only relative weakness.
Wall Street is cautious, forecasting potential downside alongside robust expected earnings growth. This is paired with healthy capital returns, anchored by a strong dividend yield, though free cash flow coverage appears tight.
TXN exhibits elite business quality, driven by exceptional capital efficiency and highly lucrative margins. This is supported by a highly conservative balance sheet featuring strong liquidity and pristine Altman Z safety.
The company is facing top-line contraction (-4.1% 3Y CAGR) however, earnings have severely contracted over the same period. This growth is supported by elite operational efficiency, sustaining an impressive 35.3% operating margin.
| Financial Metric | Trend (12Q) | Latest Qtr | 1Y Growth | 3Y CAGR | 5Y CAGR | 10Y CAGR |
|---|---|---|---|---|---|---|
| Revenue | $4.8B | +13.0% | -4.1% | +4.1% | +3.1% | |
| EBITDA | $1.9B | — | -10.3% | — | — | |
| Net Income | $1.5B | +4.2% | -17.0% | — | +5.3% | |
| EPS (Diluted) | $1.69 | +4.8% | -16.6% | -1.8% | +6.8% | |
| Free Cash Flow | $844.0M | +73.8% | -24.0% | -13.9% | — |
| Metric | TTM | 3Y Avg | 5Y Avg | 10Y Avg |
|---|---|---|---|---|
| Gross Margin | 57.3% | 59.4% | 62.9% | 63.3% |
| Operating Margin | 35.3% | 36.9% | 42.1% | 41.0% |
| Net Margin | 29.1% | 32.0% | 36.4% | 34.3% |
| FCF Margin | 20.2% | 10.7% | 19.2% | 27.4% |
| Quarter | EPS Est. | EPS Act. | Surprise | EPS | Rev |
|---|---|---|---|---|---|
| Q2'26Latest | $1.36 | $1.68 | +23.5% | ||
| Q1'26 | $1.29 | $1.27 | -1.6% | ||
| Q4'25 | $1.49 | $1.48 | -0.7% | ||
| Q3'25 | $1.36 | $1.41 | +3.7% | ||
| Q2'25 | $1.07 | $1.28 | +19.6% | ||
| Q1'25 | $1.20 | $1.30 | +8.3% | ||
| Q4'24 | $1.38 | $1.47 | +6.5% | ||
| Q3'24 | $1.17 | $1.22 | +4.3% |
Total return is +65.6% (1Y), outperforming the benchmark by +40.6%
| Period | Total Return | vs S&P 500 (Alpha) | Dividend Contribution |
|---|---|---|---|
| YTD | +83.5% | +74.2% | — |
| 1Y | +65.6% | +40.6% | +2.8% |
| 3YCAGR | +24.8% | +2.6% | +9.3% |
| 5YCAGR | +13.7% | -0.7% | +13.9% |
| 10YCAGR | +19.3% | +5.0% | — |
The S&P 500 is at 31.3x trailing P/E — Expensive relative to historical averages.
Quick answers to common questions about Texas Instruments Incorporated (TXN) valuation, health, and returns.
Texas Instruments Incorporated is estimated to be overvalued under our discounted cash flow framework. relative multiples indicate the stock is Fair versus peers compared to industry peers. overvalued (implying -22.5% downside from DCF intrinsic value of $250.21)
Texas Instruments Incorporated has multiple valuation anchors: DCF Intrinsic Value: $250.21 | Peer Relative Fair Value: $330.98 | Wall Street Analyst Target: $274.06 (implying -15.1% upside). A convergence of these signals offers higher conviction.
Texas Instruments Incorporated displays excellent financial health with a composite quality score of 80/100, supported by a Altman Z-Score of 12.7 (safe zone), Piotroski F-Score of 7/9, Return on Invested Capital (ROIC) of 15.8%.
Texas Instruments Incorporated pays a 1.7% dividend yield, covered by a 100% payout ratio with 22 years of growth, supplemented by a 0.5% buyback yield.
Texas Instruments Incorporated's current growth trajectory is Accelerating. The company achieved +13.0% 1Y revenue growth and +4.8% 1Y EPS growth, compared to its 3Y revenue CAGR of -4.1%.
Wall Street consensus is Buy based on 65 analysts, beating EPS expectations in 83% of recent quarters with a 1-quarter streak. The consensus price target represents a -15.1% change from current levels.
Investment risks for Texas Instruments Incorporated include: -30.7% 1-year max drawdown, stretched payout ratio. Volatility risk is characterized by a beta of 1.14x.
No. These computations are purely quantitative model outputs for informational purposes. They do not account for qualitative management shifts or macro events. Always consult a licensed RIA before buying or selling shares.
Disclaimer: This page is for informational purposes only and does not constitute financial advice. All valuation models, scores, and target estimates are automated computations under stated assumptions and should not be relied upon as the sole basis for any investment decision.