TXN
Texas Instruments Incorporated
Technology · Semiconductors · United States · Stock
Score Breakdown
Scored for Long-Term Growth profile
Sub-scores are 0–20 each; Model Score is weighted by your selected investment goal. How it works →
Why Ranked Here
- The profitability factor was a standout contributor, with a 34.1% operating margin, 28.3% net margin, and 14.5% return on assets all ranking at the high end of the model's evaluation criteria.
- Solid financial health — interest coverage of 11.1x and a debt-to-equity ratio of 0.86 — and strong sequential momentum into 2026Q1 supported a respectable composite score of 64.0/100.
- The dividend factor was penalized heavily due to the 100.0% payout ratio in FY2025, and the theme factor scored zero, both of which constrained the overall composite from reaching a higher level.
Why Not Higher
- The dividend payout ratio of 100.0% in FY2025 left no earnings cushion, resulting in a below-average dividend score that weighed on the composite.
- Net income growth of only 4.2% and EPS growth of only 4.8% significantly lagged the 13.0% revenue gain, and the theme factor scored zero, both limiting the composite score.
Data Confidence
10 / 10
Very High — full data coverage
Why This Score
Grounded in figures from this company's SEC EDGAR filings — not a restatement of the score itself.
Revenue grew from FY2024's $15,641,000,000 to FY2025's $17,682,000,000, a gain of 13.0%, while net income rose only 4.2% from FY2024's $4,799,000,000 to FY2025's $5,001,000,000, and diluted EPS increased 4.8% from FY2024's $5.20 to FY2025's $5.45.
The model rewarded the solid double-digit top-line expansion but tempered the score because bottom-line growth lagged revenue growth considerably, suggesting margin compression or rising costs absorbed much of the revenue gain.
In FY2025, Texas Instruments posted an operating margin of 34.1%, a net margin of 28.3%, and a return on assets of 14.5%.
These metrics reflect exceptional capital efficiency and pricing power; the model awarded a perfect score because all three profitability dimensions ranked at the high end of its evaluation criteria.
In FY2025, the debt-to-equity ratio stood at 0.86, interest coverage (operating income divided by interest expense) was 11.1x, and total assets were $34,585,000,000.
The interest coverage of 11.1x in FY2025 signals comfortable debt-service capacity, while a debt-to-equity of 0.86 indicates moderate leverage; together these supported a solid but not perfect health score.
Over the last four reported quarters, revenue moved from $4,448,000,000 in 2025Q2 to $4,742,000,000 in 2025Q3, dipped to $4,423,000,000 in 2025Q4, then rebounded to $4,825,000,000 in 2026Q1; operating income followed a similar pattern, rising from $1,563,000,000 in 2025Q2 to $1,663,000,000 in 2025Q3, falling to $1,473,000,000 in 2025Q4, and surging to $1,808,000,000 in 2026Q1; net income likewise troughed at $1,163,000,000 in 2025Q4 before reaching $1,545,000,000 in 2026Q1.
The pattern shows a mid-cycle dip followed by a strong recovery to new recent highs in 2026Q1, which the model interpreted as positive sequential acceleration and rewarded with a high but not perfect momentum score.
Dividends per share have risen each year from FY2022's $4.69 to FY2023's $5.02, FY2024's $5.26, and FY2025's $5.50, yet the FY2025 dividend payout ratio was 100.0% of net income.
The model recognized the consistent multi-year dividend growth as a positive signal but heavily penalized the 100.0% payout ratio in FY2025, which leaves no earnings cushion for reinvestment or dividend sustainability, resulting in a below-average score.
Texas Instruments is assigned to the Semiconductors macro theme.
Although the company carries the Semiconductors theme assignment, this designation did not translate into a positive score under the model's current methodology for this factor.
Research Summary
AI-generated analysis reflects data and conditions as of the report date shown above. Verify any specific figures through primary sources before acting on this analysis.
Texas Instruments earned a composite score of 64.0/100 and is classified as a Core Holding Candidate in the Semiconductors theme. The company delivered strong double-digit revenue growth of 13.0% year-over-year and exceptional profitability metrics including a 34.1% operating margin and 28.3% net margin in FY2025, reflecting genuine pricing power and capital efficiency. However, bottom-line growth lagged revenue growth considerably, the dividend payout ratio reached 100.0% of net income in FY2025, and the theme factor contributed no score to the composite, collectively tempering the overall rating. Financial health remains solid with interest coverage of 11.1x and moderate leverage at a debt-to-equity ratio of 0.86.
Plain English
Texas Instruments is a highly profitable chip company that grew sales strongly in 2025, but its costs ate into profit growth and it paid out every dollar it earned as dividends, leaving little room for error or reinvestment.
Bull Case vs. Bear Case
Bull Case
- Exceptional profitability: TXN posted a 34.1% operating margin, 28.3% net margin, and 14.5% return on assets in FY2025, reflecting strong pricing power and capital efficiency that earned a perfect profitability score.
- Strong revenue momentum: After a mid-cycle dip in 2025Q4, revenue surged to $4,825,000,000 in 2026Q1, the highest level across the last four reported quarters, signaling a robust recovery and sequential acceleration.
- Consistent dividend growth: Dividends per share have risen every year from $4.69 in FY2022 to $5.50 in FY2025, demonstrating a multi-year commitment to returning capital to shareholders.
Bear Case
- Margin compression risk: Despite 13.0% revenue growth in FY2025, net income grew only 4.2% and diluted EPS rose just 4.8%, indicating that rising costs or other pressures absorbed much of the top-line gain.
- Unsustainable payout ratio: The FY2025 dividend payout ratio reached 100.0% of net income, leaving no earnings cushion for reinvestment or to sustain the dividend if earnings decline.
- Theme factor contributed no score: Although Texas Instruments is assigned to the Semiconductors macro theme, this designation did not translate into a positive score under the model's current methodology, weighing on the composite.
What Could Change the Picture
Bullish Triggers
- If bottom-line growth begins to track closer to top-line growth in future periods, it would signal that the cost pressures compressing margins are easing, strengthening the investment case.
- A reduction in the dividend payout ratio — achieved through faster net income growth — would restore an earnings cushion and improve dividend sustainability, addressing one of the key bear concerns.
Bearish Triggers
- A reversal of the 2026Q1 revenue and operating income recovery — for example, a return to the lower levels seen in 2025Q4 — would undermine the positive momentum narrative and raise concerns about the durability of the rebound.
- Any further widening of the gap between revenue growth and net income growth could signal deepening margin compression, making the 100.0% payout ratio even more precarious.
Risk Profile
Low RiskTexas Instruments carries a Low risk rating, supported by an interest coverage ratio of 11.1x in FY2025 that signals comfortable debt-service capacity and a moderate debt-to-equity ratio of 0.86. The quarterly momentum pattern — a dip in 2025Q4 followed by a strong rebound to $4,825,000,000 in revenue and $1,808,000,000 in operating income in 2026Q1 — suggests cyclical variability but no structural deterioration.
This report is for educational and research purposes only. It does not constitute financial, investment, legal, or tax advice — always conduct your own due diligence before making investment decisions.