On Jan. 22, broad-line semiconductor designer Texas Instruments
- Generous share buybacks turned flat earnings growth into a very nice ramp-up on a per-share basis. Management explains that the leaner, meaner asset-light manufacturing model that was implemented a couple of years ago simply doesn't call for a lot of infrastructure investments -- so the cash is pumped back to shareholders instead.
- TI customers clamored for high-margin digital signal processors and analog chips, which helped to drive gross margins wider.
- The company didn't tell us how much of these results came from international markets, but in 2006, U.S. sales accounted for only 13% of total revenue. Thus TI joins Intel
and IBM(Nasdaq: INTC) in the recession-insulated international club.(NYSE: IBM) - The P/E ratio may look lofty, but TI backs it up with rambunctious cash flow growth, which gives you a better valuation basis.
(Figures in millions, except per-share data)
Income Statement Highlights
FY 2007 |
FY 2006 |
Change |
|
---|---|---|---|
Sales |
$13,835 |
$14,255 |
(2.9%) |
Net Profit, Cont. Ops |
$2,657 |
$2,638 |
0.1% |
EPS, Cont. Ops |
$1.83 |
$1.69 |
8.3% |
Diluted Shares |
1,446 |
1,560 |
(7.3%) |
Get back to basics with the income statement.
Margin Checkup
FY 2007 |
FY 2006 |
Change* |
|
---|---|---|---|
Gross Margin |
53.0% |
50.9% |
2.1 |
Operating Margin |
26.7% |
25.4% |
1.3 |
Net Margin, Cont. Ops |
19.2% |
18.5% |
0.7 |
Margins are the earnings engine.
Balance Sheet Highlights
Assets |
FY 2007 |
FY 2006 |
Change |
---|---|---|---|
Cash + ST Invest. |
$2,924 |
$3,717 |
(21.3%) |
Accounts Rec. |
$1,742 |
$1,774 |
(1.8%) |
Inventory |
$1,418 |
$1,437 |
(1.3%) |
Liabilities |
FY 2007 |
FY 2006 |
Change |
---|---|---|---|
Accounts Payable |
$657 |
$560 |
17.3% |
Long-Term Debt |
$0 |
$0 |
N/A |
The balance sheet reflects the company's health.
Cash Flow Highlights
FY 2007 |
FY 2006 |
Change |
|
---|---|---|---|
Cash From Ops. |
$4,406 |
$2,454 |
79.5% |
Capital Expenditures |
$686 |
$1,272 |
(46.1%) |
Free Cash Flow |
$3,720 |
$1,182 |
214.7% |
$3,041 |
$4,180 |
(27.2%) |
Free cash flow is a Fool's best friend.
Competitive Context
Market Cap |
Trailing P/E Ratio |
CAPS Rating (out of 5) |
|
---|---|---|---|
Qualcomm |
$60,001 |
18.8 |
*** |
Texas Instruments |
$41,210 |
16.9 |
**** |
Analog Devices |
$8,230 |
18.1 |
*** |
STMicroelectronics
NV |
$10,500 |
N/A |
** |
National Semiconductor |
$4,580 |
16.0 |
** |
Using the latest reported numbers from Capital IQ. Keep your partners close and the competition in your vest pocket.
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