Strong Sales Growth Has Helped Texas Instruments Stock Outperform The S&P

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Market
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Trefis
TXN: Texas Instruments logo
TXN
Texas Instruments

Texas Instruments Incorporated (NASDAQ: TXN) stock price rose 1.9x from $94 in 2018 end to around $179 currently, primarily due to favorable changes in its sales and P/S multiple. During this period, the company, a designer and manufacturer of semiconductors and various integrated circuits, witnessed a strong 28% rise in revenues, and combined with a 4.3% drop in its outstanding share count, revenue per share jumped 34%. Additionally, over the same period, the S&P 500 returned around 60%, meaning that TXN stock managed to outperform the index since late 2018.

In our interactive dashboard, Why Texas Instruments Stock Moved: TXN Stock Has Gained 89% Since 2018, we break down the factors behind this move.

(A) Texas Instruments’ Total Revenue has grown 28% from $15.8 billion in FY 2018 to $20.2 billion on an LTM basis

  • TI’s total revenue initially dropped from $15.8 billion in FY ’18 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 $20.2 billion on an LTM basis.
  • TI’s largest segment is the analog semiconductor segment, which 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
Relevant Articles
  1. What’s Behind Texas Instruments Stock’s Consistent Outperformance Of The Markets?
  2. Texas Instruments Stock Up 1.7x On The Back Of Strong Sales Growth
  3. How Has Texas Instruments Stock Managed To Outperform The Markets Since ’18?
  4. Here’s Why Texas Instruments’ 1.8x Move Since 2018 Does Not Come As A Surprise
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  6. After A Dismal Performance Last Month, Texas Instruments Stock Looks Set To Bounce

(B) Revenue per share (RPS) increased 34% from $16.45 in FY 2018 to $21.99 currently

  • Texas Instruments revenue rose from $15.8 billion in 2018 to $20.2 billion currently, while the outstanding share count decreased from around 959.3 million in 2018 to 918 million currently.
  • Due to this, RPS has jumped from $16.45 in FY ’18 to $21.99 currently.

(C) Price-To-Sales (P/S) multiple for Texas Instruments rose strongly from 5.7x in 2018 end to 10.5x by 2020 end, but has pulled back to 8.1x currently, still around 1.4x higher than its 2018 level

  • TI’s P/S multiple rose strongly to 10.5x 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 8.1x.
  • 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 Nov 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 TXN Return 11% -5% 145%
 S&P 500 Return 4% -15% 80%
 Trefis Multi-Strategy Portfolio 4% -19% 222%

[1] Month-to-date and year-to-date as of 11/23/2022
[2] Cumulative total returns since the end of 2016

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