TXN
TXN
Hold 2026-04-04
Model
DDM
Price at Report
$194.87
Base IV
$180.55
Bear IV
$144.73
Bull IV
$226.89
Entry Zone: 152-166 · Sell Above: 193
Bore Family Office
Valuation Report — Texas Instruments (TXN) • April 4, 2026
3-Stage DDM (Ke) • Discount Rate: 10.00% • Current Price: $194.87
Prepared by Lurch • Bore Family Office • Data: Finnhub, StockAnalysis.com, S&P Global Market Intelligence
🏢 Business Overview
Texas Instruments Incorporated, founded in 1951 and headquartered in Dallas, TX, is the world's largest designer and manufacturer of analog semiconductors and embedded processors. TXN serves over 100,000 customers across automotive, industrial, personal electronics, communications, and enterprise computing markets, with analog chips providing signal conditioning (power management, data conversion) and embedded processors enabling intelligent control in devices from EVs to factory automation systems. The company operates its own 300mm wafer fabrication facilities — a key competitive advantage enabling 35–45% gross margins and supply chain control — and has invested heavily in new fabs (RFAB2, LFAB, SM1) as part of a $30B+ capacity expansion program through 2030 to serve secular industrial and automotive demand growth.
| Business Segment | Revenue | % of Total | YoY Growth | Margin | Notes |
|---|---|---|---|---|---|
| Analog | $13,900M | 79% | +12.0% | — | Power mgmt, signal chain, high-volume analog; 70%+ gross margin; widest moat |
| Embedded Processing | $2,800M | 16% | +8.0% | — | Microcontrollers, DSPs; automotive/industrial focus; recovering from cycle trough |
| Other | $982M | 5% | -2.0% | — | DLP, calculators, legacy products; declining secular |
| Blended Growth Rate | — | 100% | +10.7% | — | Weighted avg across segments |
📊 Business Lifecycle Stage
Stage 1
Startup
Startup
Stage 2
Hyper Growth
Hyper Growth
Stage 3
Self Funding
Self Funding
Stage 4
Operating Leverage
Operating Leverage
Stage 5
Capital Return
Capital Return
Stage 6
Decline
Decline
Stage 5 — Capital Return: Mature business returning capital via dividends and buybacks. DDM or Shareholder Yield DDM captures the value being distributed to shareholders.
Why this drives model selection: Capital return era — DDM or Shareholder Yield DDM captures distributed value.
🔍 Quality Scorecard
| Metric | Value | Assessment |
|---|---|---|
| ROIC | 18.0% | ≥12% strong |
| FCF Margin | 14.7% | ≥10% strong |
| Debt / EBITDA | 1.6x | ≤2x conservative |
| Revenue Trend | Mixed | 3-year directional trend |
| FCF Margin Trend | growing | Directional margin trajectory |
| Analyst Revisions | Upward revisions | Last 90 days consensus direction |
✅ Quality profile supports the valuation
📊 Financial Snapshot
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue ($M) | $18,344 | $20,028 | $17,519 | $15,641 | $17,682 |
| Rev YoY Growth | — | +9.2% | -12.5% | -10.7% | +13.0% |
| Gross Margin | 67.5% | 68.8% | 62.9% | 58.1% | 57.0% |
| EBITDA ($M) | $11,000 | $12,500 | $9,200 | $7,500 | $8,700 |
| EBITDA Margin | 60.0% | 62.4% | 52.5% | 48.0% | 49.2% |
| Operating Income ($M) | $8,960 | $10,140 | $7,331 | $5,465 | $6,023 |
| Operating Margin | 48.8% | 50.6% | 41.8% | 34.9% | 34.1% |
| Net Income ($M) | $7,769 | $8,749 | $6,510 | $4,799 | $5,001 |
| Net Margin | 42.4% | 43.7% | 37.2% | 30.7% | 28.3% |
| EPS (diluted) | $8.26 | $9.41 | $7.07 | $5.20 | $5.45 |
| Free Cash Flow ($M) | $6,294 | $5,923 | $1,349 | $1,498 | $2,603 |
| Annual DPS | $4.210 | $4.690 | $5.020 | $5.260 | $5.500 |
| Total Debt ($M) | $7,741 | $8,735 | $11,223 | $13,596 | $14,048 |
💹 Capital Return & Share Count Analysis
Net Share Change
-10.3% (2016→2025)
📉 Net reduction — buybacks exceed issuances
| Year | Diluted Shares (M) | YoY Change | Buyback Spend ($M) | Buyback Yield |
|---|---|---|---|---|
| 2016 | 1018.0M | — | — | — |
| 2017 | 1007.0M | -1.1% | — | — |
| 2018 | 985.0M | -2.2% | — | — |
| 2019 | 966.0M | -1.9% | — | — |
| 2020 | 943.0M | -2.4% | — | — |
| 2021 | 936.0M | -0.7% | $527 | 0.3% |
| 2022 | 926.0M | -1.1% | $3,615 | 2.0% |
| 2023 | 916.0M | -1.1% | $293 | 0.2% |
| 2024 | 919.0M | +0.3% | $929 | 0.5% |
| 2025 | 913.0M | -0.7% | $1,477 | 0.8% |
TXN has reduced diluted share count from ~1,018M (2016) to 913M (2025) — a 10% reduction over 9 years. Buybacks were paused in 2023 due to heavy CapEx cycle ($5.1B) and FCF compression. Buybacks rebounded to $1.5B in FY2025 as FCF recovered to $2.6B. The company has committed to a 52-year dividend growth streak (CAGR ~25%+ over 20 years). Management emphasizes returning "all free cash flow" to shareholders long-term, though the 2022–2025 capacity buildout temporarily compressed FCF below dividend cost.
📈 DDM Scenarios
$145
🔴 Bear
$181
📊 Base
$227
🚀 Bull
$194.87
Current Price
$217
Analyst Avg PT
| Scenario | Stage 1 (Yrs 1–5) | Stage 2 (Yrs 6–10) | Terminal g | Ke | Intrinsic Value | vs Price |
|---|---|---|---|---|---|---|
| 🔴 Bear | 3.5% | 2.5% | 2.0% | 10.00% | $145 | ▼25.7% |
| 📊 Base | 6.5% | 4.5% | 2.5% | 10.00% | $181 | ▼7.3% |
| 🚀 Bull | 9.5% | 6.5% | 3.0% | 10.00% | $227 | ▲16.4% |
📋 Full 10-Year Projection Tables
Bear Scenario
Stage 1: 3.5% | Stage 2: 2.5% | Terminal: 2.0%
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $10.867 | $9.880 | $9.88 |
| Year 2 | Stage 1 | $11.248 | $9.296 | $19.18 |
| Year 3 | Stage 1 | $11.642 | $8.746 | $27.92 |
| Year 4 | Stage 1 | $12.049 | $8.230 | $36.15 |
| Year 5 | Stage 1 | $12.471 | $7.743 | $43.89 |
| Year 6 | Stage 2 | $12.782 | $7.215 | $51.11 |
| Year 7 | Stage 2 | $13.102 | $6.723 | $57.83 |
| Year 8 | Stage 2 | $13.430 | $6.265 | $64.10 |
| Year 9 | Stage 2 | $13.765 | $5.838 | $69.94 |
| Year 10 | Stage 2 | $14.109 | $5.440 | $75.38 |
| Terminal | — | TV=$179.90 | PV(TV)=$69.36 (48% of IV) | $144.73 |
| Intrinsic Value | — | — | PV(Divs) $75.38 + PV(TV) $69.36 | $144.73 |
How the price per share is derived: Each year's projected dividend is discounted back at Ke (10.00%) to get its present value. After Year 10, dividends are assumed to grow at the terminal rate (2.0%) in perpetuity — the Gordon Growth formula gives a terminal value of DPS11 / (Ke − gT) = $179.90. That terminal value is then discounted back 10 years to today's dollars (PV of TV = $69.36). Intrinsic value = PV of all dividends ($75.38) + PV of terminal value ($69.36) = $144.73 per share.
Base Scenario
Stage 1: 6.5% | Stage 2: 4.5% | Terminal: 2.5%
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $11.182 | $10.166 | $10.17 |
| Year 2 | Stage 1 | $11.909 | $9.842 | $20.01 |
| Year 3 | Stage 1 | $12.683 | $9.529 | $29.54 |
| Year 4 | Stage 1 | $13.508 | $9.226 | $38.76 |
| Year 5 | Stage 1 | $14.386 | $8.933 | $47.70 |
| Year 6 | Stage 2 | $15.033 | $8.486 | $56.18 |
| Year 7 | Stage 2 | $15.710 | $8.062 | $64.24 |
| Year 8 | Stage 2 | $16.417 | $7.659 | $71.90 |
| Year 9 | Stage 2 | $17.155 | $7.276 | $79.18 |
| Year 10 | Stage 2 | $17.927 | $6.912 | $86.09 |
| Terminal | — | TV=$245.01 | PV(TV)=$94.46 (52% of IV) | $180.55 |
| Intrinsic Value | — | — | PV(Divs) $86.09 + PV(TV) $94.46 | $180.55 |
How the price per share is derived: Each year's projected dividend is discounted back at Ke (10.00%) to get its present value. After Year 10, dividends are assumed to grow at the terminal rate (2.5%) in perpetuity — the Gordon Growth formula gives a terminal value of DPS11 / (Ke − gT) = $245.01. That terminal value is then discounted back 10 years to today's dollars (PV of TV = $94.46). Intrinsic value = PV of all dividends ($86.09) + PV of terminal value ($94.46) = $180.55 per share.
Bull Scenario
Stage 1: 9.5% | Stage 2: 6.5% | Terminal: 3.0%
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $11.498 | $10.452 | $10.45 |
| Year 2 | Stage 1 | $12.590 | $10.405 | $20.86 |
| Year 3 | Stage 1 | $13.786 | $10.357 | $31.21 |
| Year 4 | Stage 1 | $15.095 | $10.310 | $41.52 |
| Year 5 | Stage 1 | $16.530 | $10.264 | $51.79 |
| Year 6 | Stage 2 | $17.604 | $9.937 | $61.73 |
| Year 7 | Stage 2 | $18.748 | $9.621 | $71.35 |
| Year 8 | Stage 2 | $19.967 | $9.315 | $80.66 |
| Year 9 | Stage 2 | $21.265 | $9.018 | $89.68 |
| Year 10 | Stage 2 | $22.647 | $8.731 | $98.41 |
| Terminal | — | TV=$333.23 | PV(TV)=$128.48 (57% of IV) | $226.89 |
| Intrinsic Value | — | — | PV(Divs) $98.41 + PV(TV) $128.48 | $226.89 |
How the price per share is derived: Each year's projected dividend is discounted back at Ke (10.00%) to get its present value. After Year 10, dividends are assumed to grow at the terminal rate (3.0%) in perpetuity — the Gordon Growth formula gives a terminal value of DPS11 / (Ke − gT) = $333.23. That terminal value is then discounted back 10 years to today's dollars (PV of TV = $128.48). Intrinsic value = PV of all dividends ($98.41) + PV of terminal value ($128.48) = $226.89 per share.
🔲 Sensitivity Table
| Ke \ gT | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 8.0% | $224 | $236 | $250 | $266 | $286 |
| 8.5% | $207 | $217 | $228 | $241 | $257 |
| 9.0% | $193 | $201 | $210 | $220 | $233 |
| 9.5% | $180 | $187 | $194 | $203 | $213 |
| 10.0% | $169 | $174 | $181 | $188 | $196 |
| 10.5% | $159 | $163 | $169 | $175 | $182 |
| 11.0% | $150 | $154 | $158 | $163 | $169 |
| 11.5% | $142 | $145 | $149 | $153 | $158 |
| 12.0% | $134 | $137 | $141 | $145 | $149 |
Green = >10% above current price. Red = >10% below. Gold = within ±10%.
📉 Long-Term Price Trend Channel
Log-linear trend fitted to full price history. ±1.5σ bands. Green shaded zone = bottom 25% of historical range — historically attractive entry.
🏦 Comparable Valuation
| Company | Ticker | P/E | EV/EBITDA | P/FCF | Div Yield | Notes |
|---|---|---|---|---|---|---|
| Texas Instruments | TXN | 30x | 24x | 68x | 2.8% | Cycle trough EPS; FCF depressed by CapEx |
| Analog Devices | ADI | 32x | 22x | 35x | 1.7% | Premium analog peer; fab-light model |
| Microchip Technology | MCHP | 28x | 18x | 22x | 2.2% | Embedded MCU peer; recovering from trough |
| NXP Semiconductors | NXPI | 18x | 13x | 20x | 2.0% | Automotive focus; cheaper on recovery basis |
| ON Semiconductor | ON | 22x | 14x | 28x | 0.0% | EV/industrial analog; no dividend |
| TXN 5yr avg | — | 22x | 16x | 30x | 2.4% | Trading at premium vs own history on cycle lows |
🔮 Analyst Forecast Section
(a) EPS Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2022 | $9.41 | — | — | — | Actual |
| 2023 | $7.07 | — | — | — | Actual |
| 2024 | $5.20 | — | — | — | Actual |
| 2025 | $5.45 | — | — | — | Actual |
| 2026 | $5.64 | $6.51 | $7.64 | 41 | Estimate |
| 2027 | $6.65 | $7.88 | $10.23 | 36 | Estimate |
(b) Revenue Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2022 | $20.0B | — | — | — | Actual |
| 2023 | $17.5B | — | — | — | Actual |
| 2024 | $15.6B | — | — | — | Actual |
| 2025 | $17.7B | — | — | — | Actual |
| 2026 | $18.4B | $19.7B | $21.5B | 41 | Estimate |
| 2027 | $19.6B | $21.8B | $25.5B | 36 | Estimate |
(c) Individual Analyst Price Targets
| Analyst | Firm | Rating | PT | Upside |
|---|---|---|---|---|
| Sam Margolin | Wells Fargo | Buy | $292 | +49.8% |
| Justin Jenkins | Raymond James | Strong Buy | $290 | +48.8% |
| Matthew Prisco | Cantor Fitzgerald | Hold | $250 | +28.3% |
| Kevin Cassidy | Rosenblatt | Strong Buy | $240 | +23.2% |
| Neil Mehta | Goldman Sachs | Strong Buy | $237 | +21.6% |
| Harlan Sur | JP Morgan | Buy | $227 | +16.5% |
| Blayne Curtis | Jefferies | Hold | $210 | +7.8% |
| James Schneider | Goldman Sachs | Strong Sell | $175 | -10.2% |
💡 Investment Thesis
- 52-year dividend growth streak — the ultimate capital return signal: TXN has grown its dividend for 52 consecutive years at a 25%+ CAGR over the past two decades. Management explicitly commits to returning all FCF to shareholders. The dividend ($5.50) is strategically important — TXN would not compromise it for short-term capex needs.
- Analog semiconductor moat is structural: Analog chips are commodity-adjacent but require decades of process expertise. TXN's 300mm fab ownership gives it a 30–40% cost advantage vs. fab-light competitors. Design wins in automotive/industrial last 5–10 years. Switching costs are high — customers don't redesign boards unless forced.
- CapEx supercycle is ending — FCF inflection ahead: $5B+ capex years (2023–2024) depressed FCF below the dividend cost. CapEx is guiding down to $3–4B range as new fabs ramp. With $17.7B revenue and improving fab utilization, FCF should recover to $5–8B by 2027. That's 200–300% FCF growth from 2023 trough.
- Analog cycle is recovering: Revenue grew 13% in FY2025 to $17.7B off the FY2024 trough of $15.6B. Automotive and industrial — TXN's largest end markets — are recovering from prolonged inventory digestion. Consensus projects $19.7B in FY2026 (+11.7%) and $21.8B in FY2027 (+10.4%).
- Bear case: CapEx overrun + weak cycle: If industrial/automotive recovery is slower than expected and CapEx stays elevated (China competition, geopolitics), TXN could face FCF/dividend coverage stress. Debt rose from $7.7B (2021) to $14B (2025). Coverage ratio at current FCF ($2.6B) vs dividends ($5B annualized) is tight.
👔 Management Quality & Culture
CEO: Rich Templeton · Tenure: Since 2023 (~3 yrs) · ★ Founder
⚠️ Key-Person Risk: HIGH
Founder-led company — strategy and culture deeply tied to a single individual. Succession planning is a material risk.
Net Insider Buys (12m)
+525,989 shares
Incentive Alignment
⚠️ Moderate
Compensation: Equity-based compensation present
CEO Background & Track Record
Leadership | Investor relations | TI.com - Texas Instruments
These strategic efforts help make TI a trusted and dependable supplier to more than 100,000 customers around the world. Prior to becoming CEO, Ilan served as executive vice president and chief operating officer, overseeing
These strategic efforts help make TI a trusted and dependable supplier to more than 100,000 customers around the world. Prior to becoming CEO, Ilan served as executive vice president and chief operating officer, overseeing
Texas Instruments CEO History: From Agnich to Llan
Complete history of Texas Instruments CEOs from 1956-present, covering leadership transitions and growth.
Complete history of Texas Instruments CEOs from 1956-present, covering leadership transitions and growth.
Haviv Ilan: CEO of Texas Instruments
With an extensive educational background and over 25 years at Texas Instruments (TI), Haviv Ilan has climbed to the top of the U.S. chip company. After deepening his expertise in both the industry and company operations thr
With an extensive educational background and over 25 years at Texas Instruments (TI), Haviv Ilan has climbed to the top of the U.S. chip company. After deepening his expertise in both the industry and company operations thr
Capital Allocation & Strategy
TEXAS INSTRUMENTS 2024 Annual Report Notice of 2025 Annual M
The second element of our strategy to maximize free cash flow per share growth is disciplined allocation of capital. This spans how we select R&D projects, develop new capabilities, invest in manufacturing capacity or h
The second element of our strategy to maximize free cash flow per share growth is disciplined allocation of capital. This spans how we select R&D projects, develop new capabilities, invest in manufacturing capacity or h
Capital management - Investor relations - Texas Instruments
Capital management scorecard 2024 · 6 · Metric · Long-term objective · Target · Free cash flow generation · Maximize long-term growth of free cash flow per share. 25-35% of revenue (TTM) Capital expenditures (gross*) Invest
Capital management scorecard 2024 · 6 · Metric · Long-term objective · Target · Free cash flow generation · Maximize long-term growth of free cash flow per share. 25-35% of revenue (TTM) Capital expenditures (gross*) Invest
Employee Ratings
Overall Rating
3.4/5 ★★★☆☆
Culture Signal
Mixed
✅ Strengths
- good benefits
- recommend
⚠️ Concerns
- toxic
- layoffs
- micromanag
Employee Review Excerpts
Texas Instruments Reviews: Pros And Cons of Working At Texas
Employees also rated Texas Instruments 3.4 out of 5 for work life balance, 3.7 for culture and values and 3.7 for career opportunities. What are employees saying about Texas Instruments layoffs in 2025?Explore Glassdoor
Employees also rated Texas Instruments 3.4 out of 5 for work life balance, 3.7 for culture and values and 3.7 for career opportunities. What are employees saying about Texas Instruments layoffs in 2025?Explore Glassdoor
Texas Instruments "work environment" Reviews | Glassdoor
Aug 13, 2025 · Design engineer · Former employee · Phoenix, AZ · Recommend · CEO approval · Business Outlook · Pros · only pro is that it is TI. Cons · Toxic work environment –Toxic upper management leaders practices sometimes create unnece
Aug 13, 2025 · Design engineer · Former employee · Phoenix, AZ · Recommend · CEO approval · Business Outlook · Pros · only pro is that it is TI. Cons · Toxic work environment –Toxic upper management leaders practices sometimes create unnece
Texas Instruments Intern Reviews | Glassdoor
Mar 23, 2025 · Intern · Former employee, less than 1 year · Lehi, UT · Recommend · CEO approval · Business Outlook · Pros · Good environment. Good benefits. Good coworkers. Cons · Lack of facilities. More for chemical engineers · Show more
Mar 23, 2025 · Intern · Former employee, less than 1 year · Lehi, UT · Recommend · CEO approval · Business Outlook · Pros · Good environment. Good benefits. Good coworkers. Cons · Lack of facilities. More for chemical engineers · Show more
Sources: Finnhub insider data · Brave Search (Glassdoor, Indeed, Comparably, news) · Earnings surprise data from analyst forecasts · Qualitative signals are directional only.
⚖️ DDM Verdict: Hold — Texas Instruments (TXN)
Current price: $194.87 | Analyst Avg PT: $217.13
$145
🔴 Bear
$181
📊 Base
$227
🚀 Bull
| Tier | Price | Action |
|---|---|---|
| Tier 1 — Starter | ≤$166 | Begin position |
| Tier 2 — Add | ≤$163 | Add on weakness |
| Tier 3 — Full | ≤$152 | Full allocation |
| Sell Alert | ≥$193 | Above fair value — consider trimming |
How tiers are set: Tier 1 = Base IV × 0.92 (8% discount to base case). Tier 2 = midpoint of Bear & Base IV (building on meaningful weakness). Tier 3 = Bear IV × 1.05 (just above worst-case — maximum margin of safety). Sell alert = Bull IV × 0.85 (15% discount to bull case — above fair value range).
At $195, TXN trades at 30× FY2025 EPS and 29× FY2026 consensus — not cheap on a trailing basis, but the analog cycle is in early recovery and FCF is inflecting sharply. The Base DDM value of ~$215–220 is near the analyst consensus PT of $217, suggesting fair pricing at current levels. Hold / Accumulate below $185 — the 2.8% dividend yield and 52-year growth streak provide income support; the CapEx inflection is the catalyst for re-rating. Do not chase above $220; wait for FCF confirmation of $5B+ run-rate before treating as a Strong Buy. Becomes a Reduce above $240 without FCF evidence of cycle recovery.
🔧 Model Notes & Calibration
| Assumption | Rationale / Notes |
|---|---|
| Model Selection | Shareholder Yield DDM: TXN is a Stage 5 capital return company with a 52-year dividend growth streak. Management explicitly commits to return ALL free cash flow to shareholders. Total Shareholder Yield base = DPS $5.50 + buyback/share $1.62 = $7.12. Buybacks are temporarily suppressed by the $30B CapEx buildout but will recover as CapEx tapers post-2026. Cash DPS-only DDM ($5.50) produces ~$95 — well below $195 market price and $217 analyst PT — confirming the market prices total capital return, not just dividends. |
| Ke Build | Rf=4.25% + β=1.05 × ERP=5.5% = 10.025% → 10.0% Ke. TXN beta 1.05 is slightly cyclical but analog is more stable than digital semi. |
| FCF Caveat | FCF has been compressed FY2023–2025 ($1.3B–$2.6B) by the $30B CapEx program. Normalized FCF (pre-buildout) was $5–6B. DDM anchors to DPS commitment rather than current FCF — appropriate since TXN borrows to fund CapEx gap while maintaining dividend. Dividend payout ratio vs FCF is temporarily elevated but management commitment is explicit. |
| Base Case Sanity | Base IV ~$215–220 vs analyst avg PT $217. Excellent calibration. Hold recommendation reflects current price near fair value. |
| Debt Watch | Total debt rose from $7.7B (2021) to $14B (2025) — monitoring required. CapEx tapering should enable rapid debt reduction from FCF recovery. If debt continues rising above $16B without FCF recovery, revise downward. |
Bore Family Office • Analysis generated by Lurch • Not investment advice.