Semiconducting specialist Texas Instruments (NYSE:TXN) waited until markets had safely closed for the evening Tuesday before updating investors on its expectations for this quarter. In what was perhaps the shortest press release ever (excepting boilerplate, which increased the length 20-fold), TI confirmed its previous guidance, and even narrowed it a bit as it became more certain of its numbers:

  • Old numbers: $0.41 to $0.47 per share in profit on $3.26 billion to $3.54 billion in revenues.
  • New numbers: $0.42 to $0.46 per share on $3.33 billion to $3.47 billion in revenues.

So basically, TI tightened up the revenue estimate by $70 million on both ends, and correspondingly nailed down the profit figure one penny closer to the midpoint as well.

Good news?
It sure looks like good news to me. Sure, the ceiling got lowered a bit. But TI also expressed confidence that things won't turn out as bad as some might fear. At the midpoint of guidance, $0.44 in profits works out to a net margin of 17%.

While nowhere near the margins that rival Qualcomm (NASDAQ:QCOM) rakes in, TI's numbers are near what Intel (NASDAQ:INTC) and Silicon Labs (NASDAQ:SLAB) earned over the past year. It's better than NVIDIA's (NASDAQ:NVDA) 12.6% net margin, and way, way better than STMicro's (NYSE:STM) bare profitability.

So why did TI hedge its bets and announce the good news after market-close? Perhaps it became leery after the sell-offs that followed similarly decent news back in April and March. If that was the reason, then you have to at least give TI credit for understanding investors -- they've greeted TI's latest news with barely a small bump in price.

Not good enough
But here's the thing -- TI deserves a much higher price. As cheap as the stock looks with its price-to-earnings ratio of 11, it's actually even cheaper when valued based on its cash flow. Free cash flow over the past year eclipsed what TI can report as "net earnings" by nearly 20%, giving the stock a price-to-free cash flow ratio of around 9. With analyst estimates of future long-term growth hovering near 15% per year, that creates a sizable margin of safety for investors today.

Investors, Mr. Market is offering you a dirt cheap bargain today. Don't be too shy to accept it.

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