TXN – Markets expectations are for Uniform ROA to reach new highs, but management may have concerns about inventories, growth, capacity expansion, and dividends

December 10, 2021

  • Texas Instruments (TXN) currently trades near corporate but above historical averages relative to Uniform earnings, with a 22.1x Uniform P/E (Fwd. V/E’).
  • At these levels, markets are pricing in expectations for Uniform ROA to reach new highs at 58%, accompanied by 3% Uniform asset growth.
  • Meanwhile, analysts expect Uniform ROA to improve to 51% in 2022, accompanied by 8% Uniform asset growth.
  • If sustained going forward, these levels would imply a stock price closer to $204, representing approximately 9% equity upside for the firm.
  • However, the firm’s most recent earnings call suggests management may have concerns about inventories, growth, capacity expansion, and dividends.

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