Our ‘buy’ call on resilient Texas Instruments gets off to solid start
Texas Instruments (TXN:NDQ) $132.12
Gain to date: 15.5%
Original entry point: Buy at $114.42, 21 May 2020
We called US-listed Texas Instruments (TXN:NDQ) a resilient technology business for a diversified investment portfolio in our original analysis in May, and it has lived up to that reputation and more so far.
The company reported second quarter earnings of $1.48 per share on 21 July, beating consensus estimates of $0.88 per share and last year’s equivalent $1.29 per share, albeit inflated by a one-off $0.33 per shares tax gain.
Having a vast spread of markets at which to aim its power control chips is exactly what makes Texas so reliable, even in these testing times. Modest growth from industrial demand and 10% increase from consumer electronics offset under pressure automotive sales, which fell 40%-plus year-on-year.
The company is another to confirm what increasingly looks like a sustained work and learn from home trend, yet inventory build is a potential fly in the ointment and worth watching.
Many of its customers have been building stocks of vital components just in case something nasty emerges in the second half. This is a natural part of the semiconductor industry, but inventory builds never last long, so it’s something to monitor during the coming months.
SHARES SAYS: A solid start from a well-balanced business. Still a buy for the longer-term.