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Texas Instruments Inc. Quarterly Valuation – December 2014 $TXN

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After looking over the company’s fundamentals, Texas Instruments qualifies for the Enterprising Investor, as the investor type has no initial concerns. As for the more conservative Defensive Investor, there are numerous concerns including the low level of earnings growth over the last ten years, along with the high PEmg and PB ratios. As a result, only Enterprising Investors should feel comfortable proceeding to the next part of the analysis, which is a determination of the company’s intrinsic value.

Estimating the intrinsic value requires examining the company’s earnings history. Texas Instruments has grown its EPSmg (normalized earnings) from $1.90 in 2010 to only an estimated $2.07 for 2014. This demonstrated level of earnings growth does not support the market’s implied estimate of 8.84% earnings growth. In recent years, the company has seen an average annual growth in earnings of only around 1.75%. As a result, the ModernGraham valuation model returns an estimate of intrinsic value below the market price at this time, and the company appears to be overvalued by the market.

Be sure to check out previous ModernGraham valuations of Texas Instrumentsfor greater perspective!

Read the full valuation on Seeking Alpha!

TXN Chart

TXN data by YCharts

Disclaimer:  The author did not hold a position in Texas Instruments Inc. (TXN) or in any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

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