Texas Instruments Incorporated (NASDAQ:TXN) saw significant share price movement during recent months on the NASDAQGS, rising to highs of US$132 and falling to the lows of US$118. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Texas Instruments's current trading price of US$118 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Texas Instruments’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Is Texas Instruments still cheap?
Good news, investors! Texas Instruments is still a bargain right now. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Texas Instruments’s ratio of 21.62x is below its peer average of 30.64x, which suggests the stock is undervalued compared to the Semiconductor industry. Although, there may be another chance to buy again in the future. This is because Texas Instruments’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
Can we expect growth from Texas Instruments?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. However, with a relatively muted profit growth of 0.8% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Texas Instruments, at least in the short term.
What this means for you:
Are you a shareholder? Even though growth is relatively muted, since TXN is currently undervalued, it may be a great time to increase your holdings in the stock. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on TXN for a while, now might be the time to make a leap. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy TXN. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed buy.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Texas Instruments. You can find everything you need to know about Texas Instruments in the latest infographic research report. If you are no longer interested in Texas Instruments, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
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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.