Texas Instruments Stock Up 1.7x On The Back Of Strong Sales Growth

+1.55%
Upside
183
Market
186
Trefis
TXN: Texas Instruments logo
TXN
Texas Instruments

Texas Instruments Incorporated (NASDAQ: TXN) stock price rose more than 1.7x from $104 in 2017 end to around $179 currently, primarily due to favorable changes in its sales and P/S multiple. During this period, the company witnessed a strong 31% rise in revenues, and combined with a drop in its outstanding share count, revenue per share rose more than 40%. Additionally, over the same period, the S&P 500 returned around 55%, meaning that TXN stock managed to outperform the broader markets since 2017-end.

In our interactive dashboard, Why Texas Instruments Stock Moved: TXN Stock Has Gained 71% Since 2017, we break down the factors behind this move.

(A) Texas Instruments’ Total Revenue has grown 31% from $15 billion in FY 2017 to $19.6 billion on an LTM basis

  • TI’s total revenue initially dropped from $15 billion in FY ’17 to as low as $14.4 billion in FY ’19, as the semiconductor supply glut hampered sales growth.
  • However, revenues have bounced back since, and surged to $18.3 billion in FY ’21, currently standing even higher at $19.6 billion on an LTM basis.
  • TI’s analog semiconductor segment brought in $14.05 billion in FY ’21, making up more than 75% of the company’s total sales.
  • 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 42% from $14.95 in FY 2017 to $21.21 currently

  • Texas Instruments revenue rose from $15 billion in 2017 to $19.6 billion currently, while the outstanding share count decreased from around 1 billion in 2017 to just a little over 900 million currently.
  • Due to this, RPS has jumped from $14.95 in FY ’17 to $21.21 currently.

(C) Price-To-Sales (P/S) multiple for Texas Instruments rose strongly from 6.2x in 2017 end to 10x by 2020 end, but has pulled back to 8.4x currently, still around 35% higher than what it was in late 2017

  • TI’s P/S multiple rose strongly to 10x by late 2020, on the back of rising investor expectations surrounding a revival in sales growth amidst rising demand for the company’s products.
  • However, due to current geopolitical tensions and the increased economic uncertainty weighing on the broader markets, the P/S multiple has pulled back, currently standing at around 8.4x.
  • For additional details about the company stock returns and comparison to peers, see Texas Instruments (TXN) Stock Return Comparison.

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Returns Aug 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 TXN Return 0% -5% 145%
 S&P 500 Return 0% -13% 84%
 Trefis Multi-Strategy Portfolio 0% -14% 240%

[1] Month-to-date and year-to-date as of 8/1/2022
[2] Cumulative total returns since the end of 2016

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