TXN - Embedded Expectations Analysis - 2019 02 15
Texas Instruments Inc. (TXN:USA) currently trades above historical averages relative to UAFRS-based (Uniform) Earnings, with a 23.3x Uniform P/E. At these levels, markets are pricing in bullish expectations for the firm, but management may be concerned about continued decreases in gross profit, inventory management, revenue growth, and their Chinese businessSpecifically, management may lack confidence in their ability to sustain free cash flow, manage inventory costs, and allocate capital to drive initiatives in auto and industrial markets. Additionally, they may be concerned about continued gross profit headwinds, as well as ongoing trade tensions in China. Also, they may lack confidence in their ability to sustain analog revenue growth, and may be concerned about low-volume device inventory levels. Furthermore, they may have concerns about their ability to effectively plan capacity, and about the performance of their Chinese business. Finally, they may be downplaying their dependence on individual consumers or products for revenue growth, and exaggerating their ability to gain market share
Texas Instruments designs and makes semiconductors that it sells to electronics designers and manufacturers. The company has two reportable segments: Analog and Embedded Processing. The company's analog semiconductors change signals, such as sound, temperature, pressure or images to a stream of digital data. The company's analog segment primary product lines includes: power, signal chain, and high volume. The company's embedded processors are designed to handle specific tasks and can be optimized for various combinations of performance, power and cost, depending on the application. The company's embedded processing segment primary product lines includes: connected microcontrollers and processors.
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