Texas Instruments: The Future Is Filled With Free Cash Flow
| About: Texas Instruments (TXN)
Summary
TXN has access to many growth levers going forward.
The firm gushes cash, which bodes well for future dividend growth.
Valuations look a little expensive here.
The firm gushes cash, which bodes well for future dividend growth.
Valuations look a little expensive here.
Texas Instruments (TXN)
is more than just a commodity business that produces and sells
calculators - it's grown to a highly innovative Internet of Things, or IoT,
play. It makes developing applications for building everything from
factory automation to wearables easier; and offers hardware, software,
and the support to connect almost anything to the Internet in order to
make things "smarter".
The business
Texas
Instruments has two major reportable segments: Analog and Embedded
Processing. It's currently the world's largest producer of Analog chips.
The
company barely even sells any calculators anymore and is strategically
positioned in many growing end markets that will likely dominate in the
future, including markets that aren't even fully developed yet. Take
automated driving, for instance - Texas Instruments' smart sensors
enable many of the applications to make this scenario a reality.
The
company is investing increasingly more each year in research &
development, which totaled roughly $1.51 billion in fiscal 2017 (up
11%), and it's investing heavily in its best markets (Industrial and
Automotive).
According to the company's most recent capital management presentation,
Texas Instruments is allocating the majority of its capital towards
growth (funded with R&D) but also focusing on returning free cash
flow back to shareholders in the form of buybacks and dividends.
The company is a proven capital-allocator, earning wide
excess returns on its supplied capital. Its solid free cash flow growth
should also translate to solid dividend growth going forward.Source: https://seekingalpha.com/article/4168360-texas-instruments-future-filled-free-cash-flowhttps://seekingalpha.com/article/4168360-texas-instruments-future-filled-free-cash-flow
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