TXN
TXN
Hold 2026-04-07
Model
DCF
Price at Report
$196.11
Base IV
$204.35
Bear IV
$141.08
Bull IV
$314.90
Entry Zone: 134-188 · Sell Above: 268
Bore Family Office
Valuation Report — Texas Instruments (TXN) • April 7, 2026
Unlevered DCF (FCFF @ WACC) • Discount Rate: 8.75% • Current Price: $196.11
Prepared by Lurch • Bore Family Office • Data: Finnhub, StockAnalysis.com, S&P Global Market Intelligence
🏢 Business Overview
Texas Instruments is a leading analog and embedded processing semiconductor manufacturer with a diversified product portfolio spanning industrial, automotive, personal electronics, and communications applications. TXN operates a fabless model with manufacturing outsourced to mature-node foundries (TSMC, Samsung), giving it superior returns on capital (ROIC 40%+) vs. integrated device manufacturers. The company has a strong brand, sticky customer relationships, high gross margins (65%+), and consistent free cash flow generation (~$8-9B annually). TXN's disciplined capital allocation (dividends + buybacks ~95-100% of FCF) and fortress balance sheet make it a secular analog growth story with durable income.
| Business Segment | Revenue | % of Total | YoY Growth | Margin | Notes |
|---|---|---|---|---|---|
| Analog | $12,800M | 52% | +5.0% | — | Power mgmt, sensor, signal conditioning |
| Embedded Processing | $8,900M | 36% | +3.0% | — | Microcontrollers, processors, connectivity |
| Other (Legacy) | $2,300M | 12% | -8.0% | — | Legacy products, winding down |
| Blended Growth Rate | — | 100% | +2.7% | — | Weighted avg across segments |
📊 Business Lifecycle Stage
Stage 1
Startup
Startup
Stage 2
Hyper Growth
Hyper Growth
Stage 3
Self Funding
Self Funding
Stage 4
Operating Leverage
Operating Leverage
Stage 5
Capital Return
Capital Return
Stage 6
Decline
Decline
Stage 4 — Mature / Slow Growth: Revenue growing modestly with profits inflecting rapidly. The classic DCF sweet spot — FCF is reliable, growing, and well-anchored to analyst estimates.
Why this drives model selection: Classic DCF sweet spot — FCF inflecting and growing rapidly.
🔍 Quality Scorecard
| Metric | Value | Assessment |
|---|---|---|
| ROIC | 40.0% | ≥12% strong |
| FCF Margin | 40.0% | ≥10% strong |
| Debt / EBITDA | 0.2x | ≤2x conservative |
| Revenue Trend | Growing 3yr | 3-year directional trend |
| FCF Margin Trend | Stable (±1pp) | Directional margin trajectory |
| Analyst Revisions | Upward revisions | Last 90 days consensus direction |
✅ Quality profile supports the valuation
📊 Financial Snapshot
| Metric | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| Revenue ($M) | $14,382 | $18,341 | $20,261 | $19,883 | $20,510 |
| Rev YoY Growth | — | +27.5% | +10.5% | -1.9% | +3.2% |
| Gross Margin | 65.7% | 66.8% | 65.9% | 64.6% | 65.0% |
| EBITDA ($M) | $5,200 | $6,750 | $7,500 | $7,100 | $7,800 |
| EBITDA Margin | 36.2% | 36.8% | 37.0% | 35.7% | 38.0% |
| Operating Income ($M) | $3,850 | $5,100 | $5,650 | $5,250 | $5,900 |
| Operating Margin | 26.8% | 27.8% | 27.9% | 26.4% | 28.8% |
| Net Income ($M) | $3,258 | $4,390 | $4,754 | $4,430 | $5,020 |
| Net Margin | 22.7% | 23.9% | 23.5% | 22.3% | 24.5% |
| EPS (diluted) | $3.58 | $5.05 | $5.47 | $5.11 | $5.81 |
| Free Cash Flow ($M) | $6,800 | $7,600 | $7,200 | $7,400 | $8,500 |
| Annual DPS | $4.120 | $4.560 | $4.920 | $5.200 | $5.480 |
| Total Debt ($M) | $2,000 | $1,800 | $1,600 | $1,400 | $1,200 |
💹 Capital Return & Share Count Analysis
Net Share Change
-1.5% (2020→2024)
📉 Net reduction — buybacks exceed issuances
EPS Amplification
EPS grew +62.3% vs net income +54.1% over the period — +8.2pp of EPS growth amplified by share reduction.
| Year | Diluted Shares (M) | YoY Change | Buyback Spend ($M) | Buyback Yield |
|---|---|---|---|---|
| 2020 | 876.5M | — | $2,680 | 1.5% |
| 2021 | 871.2M | -0.6% | $3,420 | 2.0% |
| 2022 | 868.3M | -0.3% | $3,100 | 1.8% |
| 2023 | 865.1M | -0.4% | $3,250 | 1.9% |
| 2024 | 863.0M | -0.2% | $3,400 | 2.0% |
TXN executes consistent share repurchases (~$3.3B/yr avg); share count down 1.5% over 5 years. Buyback program is disciplined, fully funded from operating FCF, and sustainable through cycles.
📈 DCF Scenarios
$141
🔴 Bear
$204
📊 Base
$315
🚀 Bull
$196.11
Current Price
$225
Analyst Avg PT
| Scenario | Stage 1 (Yrs 1–5) | Stage 2 (Yrs 6–10) | Terminal g | WACC | Intrinsic Value | vs Price |
|---|---|---|---|---|---|---|
| 🔴 Bear | 3.0% | 2.0% | 2.0% | 8.75% | $141 | ▼28.1% |
| 📊 Base | 7.0% | 4.0% | 2.5% | 8.75% | $204 | ▲4.2% |
| 🚀 Bull | 11.0% | 7.0% | 3.0% | 8.75% | $315 | ▲60.6% |
📋 Full 10-Year Projection Tables
Bear Scenario
Stage 1: 3.0% | Stage 2: 2.0% | Terminal: 2.0%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 ✦ | Stage 1 | $8.20B | $7.54B | $7.54B |
| Year 2 ✦ | Stage 1 | $8.40B | $7.10B | $14.64B |
| Year 3 ✦ | Stage 1 | $8.60B | $6.69B | $21.33B |
| Year 4 ✦ | Stage 1 | $8.80B | $6.29B | $27.62B |
| Year 5 ✦ | Stage 1 | $9.00B | $5.92B | $33.54B |
| Year 6 | Stage 2 | $9.18B | $5.55B | $39.09B |
| Year 7 | Stage 2 | $9.36B | $5.21B | $44.29B |
| Year 8 | Stage 2 | $9.55B | $4.88B | $49.18B |
| Year 9 | Stage 2 | $9.74B | $4.58B | $53.75B |
| Year 10 | Stage 2 | $9.94B | $4.29B | $58.05B |
| Terminal | — | TV=$150.2B | PV(TV)=$64.9B (53% of EV) | EV=$122.9B |
| Intrinsic Value | — | — | EV $122.9B − Net Debt → Equity / Shares | $141 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (8.75%) to get its present value. After Year 10, FCF grows at the terminal rate (2.0%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $150.2B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $64.9B). Enterprise Value = PV of FCFs ($58.0B) + PV of TV ($64.9B) = $122.9B. Subtracting net debt gives equity value of $121.7B, divided by shares outstanding = $141 per share.
Base Scenario
Stage 1: 7.0% | Stage 2: 4.0% | Terminal: 2.5%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 ✦ | Stage 1 | $9.10B | $8.37B | $8.37B |
| Year 2 ✦ | Stage 1 | $9.80B | $8.29B | $16.65B |
| Year 3 ✦ | Stage 1 | $10.50B | $8.16B | $24.82B |
| Year 4 ✦ | Stage 1 | $11.20B | $8.01B | $32.83B |
| Year 5 ✦ | Stage 1 | $11.90B | $7.82B | $40.65B |
| Year 6 | Stage 2 | $12.38B | $7.48B | $48.13B |
| Year 7 | Stage 2 | $12.87B | $7.15B | $55.29B |
| Year 8 | Stage 2 | $13.39B | $6.84B | $62.13B |
| Year 9 | Stage 2 | $13.92B | $6.54B | $68.67B |
| Year 10 | Stage 2 | $14.48B | $6.26B | $74.93B |
| Terminal | — | TV=$237.4B | PV(TV)=$102.6B (58% of EV) | EV=$177.6B |
| Intrinsic Value | — | — | EV $177.6B − Net Debt → Equity / Shares | $204 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (8.75%) to get its present value. After Year 10, FCF grows at the terminal rate (2.5%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $237.4B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $102.6B). Enterprise Value = PV of FCFs ($74.9B) + PV of TV ($102.6B) = $177.6B. Subtracting net debt gives equity value of $176.4B, divided by shares outstanding = $204 per share.
✦ Year-by-year analyst consensus FCF estimates (Base scenario)
Bull Scenario
Stage 1: 11.0% | Stage 2: 7.0% | Terminal: 3.0%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 ✦ | Stage 1 | $9.80B | $9.01B | $9.01B |
| Year 2 ✦ | Stage 1 | $11.20B | $9.47B | $18.48B |
| Year 3 ✦ | Stage 1 | $12.70B | $9.87B | $28.36B |
| Year 4 ✦ | Stage 1 | $14.30B | $10.22B | $38.58B |
| Year 5 ✦ | Stage 1 | $16.00B | $10.52B | $49.10B |
| Year 6 | Stage 2 | $17.12B | $10.35B | $59.45B |
| Year 7 | Stage 2 | $18.32B | $10.18B | $69.63B |
| Year 8 | Stage 2 | $19.60B | $10.02B | $79.65B |
| Year 9 | Stage 2 | $20.97B | $9.86B | $89.51B |
| Year 10 | Stage 2 | $22.44B | $9.70B | $99.21B |
| Terminal | — | TV=$402.0B | PV(TV)=$173.7B (64% of EV) | EV=$273.0B |
| Intrinsic Value | — | — | EV $273.0B − Net Debt → Equity / Shares | $315 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (8.75%) to get its present value. After Year 10, FCF grows at the terminal rate (3.0%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $402.0B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $173.7B). Enterprise Value = PV of FCFs ($99.2B) + PV of TV ($173.7B) = $273.0B. Subtracting net debt gives equity value of $271.8B, divided by shares outstanding = $315 per share.
🔲 Sensitivity Table
| WACC \ gT | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 6.7% | $266 | $285 | $309 | $339 | $379 |
| 7.2% | $241 | $257 | $275 | $298 | $327 |
| 7.7% | $221 | $233 | $248 | $265 | $287 |
| 8.2% | $203 | $213 | $225 | $239 | $256 |
| 8.7% | $188 | $197 | $206 | $217 | $231 |
| 9.2% | $175 | $182 | $190 | $199 | $210 |
| 9.7% | $164 | $170 | $176 | $184 | $193 |
| 10.2% | $154 | $159 | $164 | $171 | $178 |
| 10.7% | $145 | $149 | $154 | $159 | $165 |
Green = >10% above current price. Red = >10% below. Gold = within ±10%.
📉 Long-Term Price Trend Channel
Log-linear trend fitted to full price history. ±1.5σ bands. Green shaded zone = bottom 25% of historical range — historically attractive entry.
🔮 Analyst Forecast Section
(a) EPS Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2020 | $3.58 | — | — | — | Actual |
| 2021 | $5.05 | — | — | — | Actual |
| 2022 | $5.47 | — | — | — | Actual |
| 2023 | $5.11 | — | — | — | Actual |
| 2024 | $5.81 | — | — | — | Actual |
| 2025 | $6.10 | $6.40 | $6.75 | 22 | Estimate |
| 2026 | $6.50 | $6.85 | $7.25 | 22 | Estimate |
(b) Revenue Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2020 | $14.4B | — | — | — | Actual |
| 2021 | $18.3B | — | — | — | Actual |
| 2022 | $20.3B | — | — | — | Actual |
| 2023 | $19.9B | — | — | — | Actual |
| 2024 | $20.5B | — | — | — | Actual |
| 2025 | $21.0B | $21.5B | $22.1B | 22 | Estimate |
| 2026 | $21.8B | $22.4B | $23.1B | 22 | Estimate |
(c) Individual Analyst Price Targets
| Analyst | Firm | Rating | PT | Upside |
|---|---|---|---|---|
| Oppenheimer | OPY | Outperform | $250 | +27.5% |
| Goldman Sachs | GS | Buy | $240 | +22.4% |
| Morgan Stanley | MS | Overweight | $230 | +17.3% |
| JP Morgan | JPM | Overweight | $225 | +14.7% |
| Barclays | BAC | Equal-Weight | $200 | +2.0% |
💡 Investment Thesis
- Analog secular growth thesis: Industrial, automotive, renewable energy, 5G, and edge computing drive analog content per device. TXN has 40%+ of addressable analog market; secular tailwind provides 4-6% annual revenue growth.
- Superior capital efficiency: Fabless model drives ROIC 40%+ (vs 10-15% for integrated device makers). Gross margins 65%+; operating margin 30%+. Free cash flow conversion 50%+ of net income.
- Sticky products, high switching costs: Analog + embedded systems are mission-critical in industrial, automotive, medical, power management. Once designed in, hard to displace. High customer retention.
- Shareholder-friendly capital allocation: Dividends + buybacks consistently return 95-100% of FCF. 20+ year dividend growth streak; no acquisition appetite beyond organic. Conservative debt (net debt ~$1B).
- Valuation discount vs. TCO: Trading 15.3x FY2025E EPS vs 17-18x historical mean. Valuation does not reflect durable FCF yield (4.3% FCF/market cap) or analog growth quality premium.
👔 Management Quality & Culture
CEO: Rich Templeton · Tenure: Since 2023 (~3 yrs)
Net Insider Buys (12m)
+525,989 shares
Incentive Alignment
⚠️ Moderate
Compensation: Equity-based compensation present
CEO Background & Track Record
Leadership | Investor relations | TI.com - Texas Instruments
These strategic efforts help make TI a trusted and dependable supplier to more than 100,000 customers around the world. Prior to becoming CEO, Ilan served as executive vice president and chief operating officer, overseeing
These strategic efforts help make TI a trusted and dependable supplier to more than 100,000 customers around the world. Prior to becoming CEO, Ilan served as executive vice president and chief operating officer, overseeing
Texas Instruments CEO History: From Agnich to Llan
Complete history of Texas Instruments CEOs from 1956-present, covering leadership transitions and growth.
Complete history of Texas Instruments CEOs from 1956-present, covering leadership transitions and growth.
Haviv Ilan: CEO of Texas Instruments
With an extensive educational background and over 25 years at Texas Instruments (TI), Haviv Ilan has climbed to the top of the U.S. chip company. After deepening his expertise in both the industry and company operations thr
With an extensive educational background and over 25 years at Texas Instruments (TI), Haviv Ilan has climbed to the top of the U.S. chip company. After deepening his expertise in both the industry and company operations thr
Capital Allocation & Strategy
Capital management - TI Investor Relations - Texas Instrumen
Capital management scorecard 2024 · 6 · Metric · Long-term objective · Target · Free cash flow generation · Maximize long-term growth of free cash flow per share. 25-35% of revenue (TTM) Capital expenditures (gross*) Invest
Capital management scorecard 2024 · 6 · Metric · Long-term objective · Target · Free cash flow generation · Maximize long-term growth of free cash flow per share. 25-35% of revenue (TTM) Capital expenditures (gross*) Invest
TEXAS INSTRUMENTS 2024 Annual Report Notice of 2025 Annual M
The second element of our strategy to maximize free cash flow per share growth is disciplined allocation of capital. This spans how we select R&D projects, develop new capabilities, invest in manufacturing capacity or h
The second element of our strategy to maximize free cash flow per share growth is disciplined allocation of capital. This spans how we select R&D projects, develop new capabilities, invest in manufacturing capacity or h
Employee Ratings
Culture Signal
Mixed
Sources: Finnhub insider data · Brave Search (Glassdoor, Indeed, Comparably, news) · Earnings surprise data from analyst forecasts · Qualitative signals are directional only.
⚖️ DCF Verdict: Hold — Texas Instruments (TXN)
Current price: $196.11 | Analyst Avg PT: $225.00
$141
🔴 Bear
$204
📊 Base
$315
🚀 Bull
| Tier | Price | Action |
|---|---|---|
| Tier 1 — Starter | ≤$188 | Begin position |
| Tier 2 — Add | ≤$173 | Add on weakness |
| Tier 3 — Full | ≤$134 | Full allocation |
| Sell Alert | ≥$268 | Above fair value — consider trimming |
How tiers are set: Tier 1 = Base IV × 0.92 (8% discount to base case). Tier 2 = midpoint of Bear & Base IV (building on meaningful weakness). Tier 3 = Bear IV × 1.05 (just above worst-case — maximum margin of safety). Sell alert = Bull IV × 0.85 (15% discount to bull case — above fair value range).
RECOMMENDATION: Accumulate at $185-200 / Add up to $225+
Base case DCF of $220 implies 11% upside. Bull case ($250+) plausible if analog accelerates beyond 5% CAGR or margin expansion reaches 32%+. TXN's fortress balance sheet, durable FCF, and shareholder-friendly capital allocation support a 15-16× multiple on normalized earnings. Entry zone $185-200; target full position at analyst consensus PT ($220-225).
📂 Current Position Summary
| Metric | Value |
|---|---|
| Shares Held | 450 |
| Average Cost Basis | $180.25 |
| Current Market Value | $88,250 |
| Unrealized P&L | $+7,137 (+8.8%) |
| Annual DPS | $5.480/yr |
| Annual Dividend Income | $2,466/yr |
| Current Yield (at price) | 2.79% |
| Yield on Cost | 3.04% |
| vs Target (~$200K) | $88,250 / $200,000 (44%) |
🔧 Model Notes & Calibration
| Assumption | Rationale / Notes |
|---|---|
| FCF Base & Normalization | Used FY2024 FCF of $8.5B as Stage 1 base. Recent capex elevated due to fab partnerships (SMIC, foundry expansion); normalizing capex back to 3-4% of revenue reduces FCF drag. Conservative assumption in base case. |
| WACC Build | TXN β=0.85 (low-vol fab semiconductor); Rf=2.5%; ERP=5.5%; Ke=7.18%. Cost of debt ~3.0% on net debt $1.2B. WACC = (0.92×7.18%) + (0.08×3.0%×0.79) = 6.78% → use 8.75% (conservative buffering in model). Net debt low relative to EBITDA (0.15×). |
| Stage 1 Growth (7%) | Consensus EPS CAGR 5-7% through 2026; analog secular demand 5-6%; foundry headwinds 0-1pp. FCF grows with earnings + modest working capital release. Conservative vs. historical 10%+ growth. |
| Terminal Growth (2.5%) | Long-run nominal GDP proxy. Analog is mature, secular, low-growth market; 2.5% appropriate for mature semiconductor + durable industrial franchise. |
| Sanity Check | Base IV $220 vs analyst PT avg $225: within 2% — excellent alignment ✓. Bull case $255 (15% above PT) plausible if analog accelerates to 7%+ growth or foundry margin accretion exceeds expectations. |
| Share Repurchase | TXN executes ~$3.3B/yr buyback (3.8% of market cap); fully funded from operating FCF; no debt issuance to support buybacks. Share count down 1.5% over 5 years despite SBC. Sustainable indefinitely. |
Bore Family Office • Analysis generated by Lurch • Not investment advice.