Texas Instruments (NASDAQ:TXN) May Have Issues Allocating Its Capital

Simply Wall St.11-21

If you're not sure where to start when looking for the next multi-bagger, there are a few key trends you should keep an eye out for. Firstly, we'll want to see a proven return on capital employed (...

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Firstly, we'll want to see a proven return on capital employed (...</p>\n\n<a href=\"https://finance.yahoo.com/news/texas-instruments-nasdaq-txn-may-130023684.html\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4554","symbol_name":"元宇宙及AR概念","start_time":0,"source_url":"https://finance.yahoo.com/news/texas-instruments-nasdaq-txn-may-130023684.html","article_id":"2485946754","we_media_id":null,"thumbnails":["https://s.yimg.com/uu/api/res/1.2/nVZBzHjSfmrOeiNH4DmLZQ--~B/aD00MzI7dz0xMTk0O2FwcGlkPXl0YWNoeW9u/https://media.zenfs.com/en/simply_wall_st__316/c54cdc42eba5c31ad5283d6ad36f518e"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2485946754","pubTimestamp":1732194023,"sourceInfo":{"source_id":"yahoofinance","name":"雅虎金融"},"weMediaInfo":null,"summary":"If you're not sure where to start when looking for the next multi-bagger, there are a few key trends you should keep an eye out for. 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Firstly, we'll want to see a proven return on capital employed (ROCE) that is increasing, and secondly, an expanding base of capital employed. Basically this means that a company has profitable initiatives that it can continue to reinvest in, which is a trait of a compounding machine. Although, when we looked at Texas Instruments (NASDAQ:TXN), it didn't seem to tick all of these boxes. \n What Is Return On Capital Employed (ROCE)? \n If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business. The formula for this calculation on Texas Instruments is: \n Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) \n0.17 = US$5.5b ÷ (US$35b - US$3.7b) (Based on the trailing twelve months to September 2024).\n So, Texas Instruments has an ROCE of 17%.  On its own, that's a standard return, however it's much better than the 8.6% generated by the Semiconductor industry. \n View our latest analysis for Texas Instruments \n\n\n\n  NasdaqGS:TXN Return on Capital Employed November 21st 2024\n \n\n In the above chart we have measured Texas Instruments' prior ROCE against its prior performance, but the future is arguably more important. If you're interested, you can view the analysts predictions in our free analyst report for Texas Instruments . \n So How Is Texas Instruments' ROCE Trending? \n On the surface, the trend of ROCE at Texas Instruments doesn't inspire confidence. Around five years ago the returns on capital were 37%, but since then they've fallen to 17%. Given the business is employing more capital while revenue has slipped, this is a bit concerning. This could mean that the business is losing its competitive advantage or market share, because while more money is being put into ventures, it's actually producing a lower return - \"less bang for their buck\" per se. \n In Conclusion... \n We're a bit apprehensive about Texas Instruments because despite more capital being deployed in the business, returns on that capital and sales have both fallen. Yet despite these concerning fundamentals, the stock has performed strongly with a 87% return over the last five years, so investors appear very optimistic. Regardless, we don't feel too comfortable with the fundamentals so we'd be steering clear of this stock for now. \n Texas Instruments does come with some risks though, we found 2 warning signs in our investment analysis, and 1 of those is concerning... \n While Texas Instruments may not currently earn the highest returns, we've compiled a list of companies that currently earn more than 25% return on equity. Check out this free list here. \nHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"-1","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.2","shortVersion":"4.29.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2485946754"}