Credit: Shutterstock photoOn Jan 2, we issued an updated research report on Texas Instruments, Inc.TXN .
The company's recent product additions in the industrial and auto space are anticipated to effectively address the increasing demand for semiconductor content in these markets. Additionally, Texas Instruments' solid presence in other end markets, stable revenue stream and rising demand for its products will broaden its clientele and addressed market.
However, Texas Instruments' stock has gained 43.5% in the past 12 months, underperforming the 49% rally of the industry it belongs to.
Key Factors
Texas Instruments continues to benefit from the strong demand it is witnessing in the fast-growing automotive market. The company focuses on infotainment, safety and ADAS, body electronics (including lighting), hybrid electric vehicle and powertrain segments of the automotive market. The company has made significant progress in the ADAS front, shipping millions of chips to the market. Demand for electronic content in cars is expected to grow in the future and this will support the top line of the company.
Moreover, the company's focus on Internet of Things (IoT) is a big positive. The scope of IoT is tremendous for semiconductor companies, since it connects every conceivable electronic device. Much of the growth in the embedded business comes from microcontrollers, which are the enabling products. Independent research firms, Gartner and IDC project steady growth in IoT-related spending through 2020. Texas Instruments has been refreshing its product line to benefit from the growing IoT market.
Management is focused on improving gross and operating margins. The company is making efforts toward improving its existing portfolio and acquiring businesses over time that will aid its top and bottom-line trajectory.
Additionally, the company's strong balance sheet has enabled it to invest in growth initiatives. A strong operating cash flow has helped it to return cash through regular quarterly dividends and share repurchases, which has worked well in retaining investors' interest as well as giving a boost to its earnings.
Zacks Rank and Stocks to Consider
Texas Instruments currently carries at a Zacks Rank #2 (Buy). A few other top-ranked stocks in the broader technology sector are NVIDIA Corporation NVDA , SMART Global Holdings, Inc. SGH and Applied Materials, Inc. AMAT , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .
Long-term earnings per share growth rate for NVIDIA Corporation, SMART Global and Applied Materials is projected to be 10.3%, 15.0% and 12.7%, respectively.
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Texas Instruments Incorporated (TXN): Free Stock Analysis Report
NVIDIA Corporation (NVDA): Free Stock Analysis Report
Applied Materials, Inc. (AMAT): Free Stock Analysis Report
SMART Global Holdings, Inc. (SGH): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
