Texas Instruments (NASDAQ:TXN) often flies under the radar, but investors should take a closer look at this semiconductor manufacturer. The company specializes in analog chips and embedded processing products, and it's the industry leader in both cases.

In this Backstage Pass video, which was recorded on Oct. 27, 2021, Motley Fool contributor Nick Rossolillo hits the highlights from Texas Instruments' third-quarter earnings, explaining why the long-term investment thesis is still intact for this dividend-paying company.

Nick Rossolillo: Let's do Texas Instruments -- so chip designer and manufacturer. They've reported yesterday afternoon after market closed. Let me share the slide here on how they did.

Overall, you're going to see a couple of misses based on analyst expectations, but they were very minimal. The results were basically about online with where management something would be at the end of last quarter. Third-quarter revenue: $4.64 billion, which was a 22% year-over-year gain. Earnings per share: $2.07, which was actually 43% year-over-year gain. Of course, the story here, like it has been all year and end of last year with semiconductor companies is the chip shortage, which benefits manufacturers like Texas Instruments.

They have no shortage of demand more for everything chip-related be it from the auto industry, industrial companies, consumer electronics, you name it. Everything has been up across the board for this company. Trailing-12-months free cash flow, which -- let's hit on that for just a moment, because Texas Instruments, long time CEO and Chairman -- there's a quote right at the top of their investor relations page that says: "Texas Instruments believes free cash flow per share is the best measure of shareholder return over time."

So, trailing-12-month free cash flow of just over $7.1 billion in last 12 months, about 41% profit margin. This is a pretty boring semiconductor company. But the shareholder returns are certainly not. That free cash flow is so important because it dictates the amount of dividend the company can pay, the amount of share repurchases it can make. That's the great thing about Texas Instruments, even though it's a cyclical manufacturing company. Its returns will ebb and flow with client demand for chips. But over time, this has just been fantastic business, especially if you're looking for some income from your investments along the way.

A couple of concerns that have started to crop up on the earnings call. Management talked about, they see some of the supply demand imbalance eventually ending in the near-term. We're hearing a lot about supply chain issues and the chip shortage. This was the first indication I saw from a company like this that said, hinted that, "Hey you know what? This shortages isn't going to last forever." They said specifically some of our customers were not making widespread, expedited orders this quarter.

Maybe some of the demand is starting to come back in line with what's able to be supplied in the chip industry. As a result, the company has been reporting north of 20% revenue growth since late last year. The fourth quarter outlook, though, as for year-over-year revenue growth, as much as 12%. We're starting to see things slowed down a little bit. Maybe we're starting to reach some cyclical top for Texas Instruments and maybe for the semiconductor industry overall. That still remains to be seen, but there is some of the concerns. But long-term, the reason for owning a company like this is still very much in place.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.