Low p/e for a top chipmaker

Article Excerpt

TEXAS INSTRUMENTS INC. $153 is a buy. The company (Nasdaq symbol TXN; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 923.6 million; Market cap: $141.3 billion; Price-to-sales ratio: 7.6; Dividend yield: 3.0%; TSINetwork Rating: Average; www.ti.com) is a top maker of analog chips, which convert inputs like touch, sound and pressure into electronic signals that computers can understand. In the quarter ended March 31, 2022, Texas Instruments’ revenue increased 14.4%, to $4.91 billion from $4.29 billion a year earlier. That gain was due to strong demand from makers of industrial and automotive products. As well, earnings rose to $2.20 billion, or $2.35 a share. That’s 25.6% higher than $1.75 billion, or $1.87, a year earlier. The company will probably earn $9.10 a share for all of 2022, and the stock trades at 16.8 times that estimate. That’s a low multiple in light of Texas Instrument’s high research spending—8.0% of revenue in the latest quarter. The company has also raised your dividend each year for…

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