How Has Texas Instruments Stock Managed To Outperform The Markets Since ’18?

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TXN: Texas Instruments logo
TXN
Texas Instruments

Texas Instruments Incorporated (NASDAQ: TXN) stock price rose almost 1.8x from $94 in 2018 end to over $167 currently, primarily due to favorable changes in its P/S multiple. During this period, the company also witnessed a steady rise in revenue, and a substantial drop in the outstanding share count, which further boosted the company’s revenue per share and stock price. Further, over the same period, the S&P 500 returned around 65%, meaning that Texas Instruments stock managed to outperform the broader markets.

In our interactive dashboard, Why Texas Instruments Stock Moved: TXN Stock Has Gained 77% Since 2018, we break down the factors behind this move.

(A) TXN’s Total Revenue has grown 20% from $15.8 billion in 2018 to $19 billion on an LTM basis

  • Texas Instruments’ total revenue initially fell from $15.8 billion in 2018 to $14.5 billion in 2020, before accelerating to $18.3 billion in FY ’21, and standing at as high as $19 billion currently (TI’s fiscal year ends in December).
  • Texas Instruments designs and manufactures semiconductors and various integrated circuits, which it sells to electronics designers and manufacturers globally.
  • TI’s analog semiconductor sales stood at $14.05 billion as of FY ’21, making up more than 75% of FY ’21 net sales, with embedded processing revenues coming in second with just around 16%.
  • For additional details about TI’s revenues and comparison to peers, see Texas Instruments (TXN) Revenue Comparison
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(B) Revenue per share (RPS) increased 26% from $16.15 in 2018 to $20.42 currently

  • TI’s revenue rose from $15.8 billion in 2018 to $19 billion currently, while the outstanding share count decreased at a quick rate, too, from 977.2 million in 2018 to under 930 million currently.
  • Due to this, RPS has jumped from $16.15 in FY ’18 to $20.42 currently.

(C) Price-To-Sales (P/S) multiple for Texas Instruments rose strongly from 5.6x in 2018 to 10.6x by 2020 end, but has pulled back to 8.2x currently, still almost 1.5x higher than its 2018 level

  • Due to TI’s stellar sales recovery since 2020, its P/S multiple rose strongly to around 10x by late 2021, on the back of rising investor expectations surrounding continued analog semiconductor demand growth.
  • However, due to current geopolitical tensions and increased economic uncertainty weighing on the broader markets, the P/S multiple has pulled back, currently standing at around 8.2x.
  • For additional details about the company stock returns and comparison to peers, see Texas Instruments (TXN) Stock Return Comparison.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

Returns May 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 TXN Return -3% -12% 126%
 S&P 500 Return -3% -16% 79%
 Trefis Multi-Strategy Portfolio -6% -22% 207%

[1] Month-to-date and year-to-date as of 5/9/2022
[2] Cumulative total returns since the end of 2016

 

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