Why Has Texas Instruments’ Stock Gained More Than 70% In the Last 3 Years?

by Trefis Team
Texas Instruments
Rate   |   votes   |   Share

Texas Instruments’ (NASDAQ: TXN) stock has risen from about $69 in August 2016 to around $120 in August 2019. The rise was primarily driven by a steady growth in revenues and net income margins, accompanied by a drop in shares outstanding, and a slightly higher P/E multiple. We expect growth to stagnate in 2019, due to lower consumer electronics demand and trade tensions. However, the advent of 5G could help somewhat offset this cooling demand.

View our interactive dashboard analysis Texas Instruments: Why has the stock gained more than 70% in the last 3 years?

We break down the change in Texas Instruments’ stock into 4 factors: Stock Price = (Revenue x Margins / No. of Shares) x P/E Multiple


A] Texas Instruments’ revenue growth has largely been driven by growing consumer demand and company initiatives to stay ahead of competitors

  • Total Revenue has grown by 19% between 2016 and 2018, but we expect a slight drop over 2019, on the back of slowing demand and trade tensions.
  • Revenue from Analog Semiconductors, which has been a major driver, is expected to suffer from increasing competition.
  • However, things should pick up in late 2019, with the expected launch of 5G pushing up demand.
  • The ongoing trade tensions and the fall in consumer demand, are expected to push down revenue slightly.


B] Net Income Margin has grown from 26.89% in 2016 to 35.36% in 2018, but we expect a slowdown in growth in 2019

  • The increase in net margins is due to the high profit margins from the analog semiconductor division, which we expect to continue going into 2019.
  • Net income margins could drop slightly to 34.4% in 2019, as slowing demand is expected to weigh down on revenue .

C] How Texas Instruments’ P/E Multiple compares to that of its peers?

  • Texas Instruments’ P/E multiple has gradually risen from 19.7x in 2016 to 22.6x in 2018, on the back of strong revenue growth and healthy demand.
  • We expect the P/E multiple to hover around the same level for 2019, due to stable net margins and a stable growth outlook going forward.
  • Meanwhile, Microchip Technology’s P/E multiple has fluctuated drastically over the same period, while Analog Devices has seen an increase in P/E multiple over the past year.


What’s behind Trefis? See How It’s Powering New Collaboration and What-Ifs

For CFOs and Finance Teams | Product, R&D, and Marketing Teams

More Trefis Data

Like our charts? Explore example interactive dashboards and create your own.

Rate   |   votes   |   Share


Name (Required)
Email (Required, but never displayed)
Be the first to comment!