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After reading Texas Instruments Incorporated's (NASDAQ:TXN) most recent earnings announcement (31 March 2019), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether Texas Instruments's performance has been impacted by industry movements. In this article I briefly touch on my key findings.
Could TXN beat the long-term trend and outperform its industry?
TXN's trailing twelve-month earnings (from 31 March 2019) of US$5.4b has jumped 34% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 16%, indicating the rate at which TXN is growing has accelerated. What's enabled this growth? Let's see whether it is solely owing to industry tailwinds, or if Texas Instruments has experienced some company-specific growth.
In terms of returns from investment, Texas Instruments has invested its equity funds well leading to a 64% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 32% exceeds the US Semiconductor industry of 8.0%, indicating Texas Instruments has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Texas Instruments’s debt level, has increased over the past 3 years from 32% to 42%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that have performed well in the past, such as Texas Instruments gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research Texas Instruments to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for TXN’s future growth? Take a look at our free research report of analyst consensus for TXN’s outlook.
- Financial Health: Are TXN’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 March 2019. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.