TEXAS INSTRUMENTS INC. $51 - Nasdaq symbol TXN

TEXAS INSTRUMENTS INC. $51 (Nasdaq symbol TXN; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.0 billion; Market cap: $51.0 billion; Price- to-sales ratio: 3.9; Dividend yield: 3.0%; TSINetwork Rating: Average; www.ti.com) specializes in analog chips, which convert inputs like touch, sound and pressure into electronic signals that computers can understand. Manufacturers use these chips in a variety of products, including cars, cameras, medical devices and appliances. In 2015, Texas Instruments’ earnings rose 5.8%, to $3.0 billion from $2.8 billion in 2014. It spent $2.7 billion on share buybacks during the year, so earnings per share gained 9.7%, to $2.82 from $2.57. Overall revenue fell 0.3%, to $13.00 billion from $13.05 billion. Sales of analog chips (64% of the total) rose 2.9%. Revenue from embedded processor chips (21%), which perform mathematical calculations, gained 1.7%. However, revenue from other chips and calculators (15%) fell 14.9%. Thanks to its improving efficiency, the company’s gross profit margin (gross profits as a percentage of revenue) rose to 58.2% from 56.9%. Texas Instruments now plans to close its chip-making plant in Scotland and shift its production to larger, more efficient facilities in the U.S., Japan and Germany. The company expects to complete the move by 2019; it hasn’t said how much it expects to pay in severance and other costs. Excluding unusual items, Texas Instruments will probably earn $2.97 a share in 2016, and the stock trades at 17.2 times that estimate. That’s reasonable, considering the company spends 10% of its revenue on research. The $1.52 dividend yields 3.0%. Texas Instruments is a buy.

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