TXN – Market expectations are for further Uniform ROA expansion, but management has concerns about profitability, inventory, growth, and macroeconomic factors

• Texas Instruments Inc. (TXN:USA) currently trades above historical averages relative to UAFRS-based (Uniform) Earnings, with a 23.3x Uniform P/E. At these levels, markets are pricing in bullish expectations for the firm, but management may be concerned about continued decreases in gross profit, inventory management, revenue growth, and their Chinese business
• Specifically, management may lack confidence in their ability to sustain free cash flow, manage inventory costs, and allocate capital to drive initiatives in auto and industrial markets. Additionally, they may be concerned about continued gross profit headwinds, as well as ongoing trade tensions in China. Also, they may lack confidence in their ability to sustain analog revenue growth, and may be concerned about low-volume device inventory levels. Furthermore, they may have concerns about their ability to effectively plan capacity, and about the performance of their Chinese business. Finally, they may be downplaying their dependence on individual consumers or products for revenue growth, and exaggerating their ability to gain market share