DCF Studio

    TXN · NMS · Technology

    Texas Instruments Incorporated

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 146.66

    Market price

    USD 302.02

    Implied upside

    -51.4%

    10-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · Price 2026-11-02 · Accounts to 2025-12-31

    AdjustedCapital expenditure runs at 24.9% of revenue against depreciation of 8.3%. A perpetuity has to be a steady state, so the forecast tapers capex to maintenance at depreciation plus the reinvestment terminal growth requires (g/ROIC of NOPAT), and the terminal year carries on from there. The bridge is shown under Terminal Value.

    Current EV/EBITDA of 35.1x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    USD 146.66-51.4%
    Exit multiple
    USD 272.07-9.9%
    Market price
    USD 302.02

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn8bn16bnFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35CAGR
    RevenueUSD 22.4bnUSD 26.2bnUSD 30.3bnUSD 34.3bnUSD 38.4bnUSD 42.1bnUSD 45.5bnUSD 48.3bnUSD 50.4bnUSD 51.6bn+9.7%
    EBITUSD 9.1bnUSD 10.7bnUSD 12.3bnUSD 14.0bnUSD 15.6bnUSD 17.1bnUSD 18.5bnUSD 19.6bnUSD 20.5bnUSD 21.0bn+9.7%
    NOPATUSD 8.0bnUSD 9.4bnUSD 10.8bnUSD 12.2bnUSD 13.7bnUSD 15.0bnUSD 16.2bnUSD 17.2bnUSD 18.0bnUSD 18.4bn+9.7%
    Add depreciation & amortisationUSD 1.9bnUSD 2.2bnUSD 2.5bnUSD 2.9bnUSD 3.2bnUSD 3.5bnUSD 3.8bnUSD 4.0bnUSD 4.2bnUSD 4.3bn+9.7%
    Less capital expenditureUSD -5.6bnUSD -6.2bnUSD -6.7bnUSD -7.1bnUSD -7.4bnUSD -7.6bnUSD -7.5bnUSD -7.3bnUSD -6.9bnUSD -6.4bn+1.5%
    Capex, % of revenue24.9%23.5%22.1%20.7%19.3%17.9%16.5%15.2%13.8%12.4%-
    Less increase in working capitalUSD -1.5bnUSD -1.2bnUSD -1.3bnUSD -1.3bnUSD -1.3bnUSD -1.2bnUSD -1.1bnUSD -875.6mUSD -653.3mUSD -393.3m-13.6%
    Free cashflow to firmUSD 2.8bnUSD 4.2bnUSD 5.4bnUSD 6.7bnUSD 8.2bnUSD 9.8bnUSD 11.4bnUSD 13.0bnUSD 14.6bnUSD 15.9bn+21.3%
    Discount factor0.95370.86730.78880.71740.65250.59340.53970.49080.44640.4060-
    Present valueUSD 2.7bnUSD 3.6bnUSD 4.2bnUSD 4.8bnUSD 5.4bnUSD 5.8bnUSD 6.2bnUSD 6.4bnUSD 6.5bnUSD 6.5bn-
    Present Value Of The ForecastUSD 52.1bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.89%US 10-year Treasury (^TNX), 2026-11-02
    Equity risk premium4.23%Damodaran, January 2026
    Beta1.260Reported 1.388, pulled toward 1.0 (Blume)
    Cost of equity10.22%Risk-free + beta x equity risk premium
    Cost of debt5.29%Risk-free + 40bp, the spread for a AAA rating at 11.3x interest cover. Book interest / average debt was lower, at 3.9%.
    Market capitalisationUSD 276.1bn95.2% of capital
    Total debtUSD 14.0bn4.8% of capital, book value as a proxy
    Tax rate12.3%Effective, capped at statutory
    WACC9.95%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 146.66

    64% of EV

    Forecast FCFF, final year
    USD 15.9bn
    Capex at depreciation, working capital in reinvestment
    USD 18.6bn
    Less reinvestment at g/ROIC (12.3% of NOPAT)
    USD -2.3bn
    Capitalised
    USD 16.3bn
    ROIC (reported)
    20.3%
    Terminal value, undiscounted
    USD 224.1bn
    Terminal value, discounted
    USD 91.0bn
    Enterprise value
    USD 143.1bn
    Less net debt
    USD 9.2bn
    Equity value
    USD 133.9bn

    Exit at 20.0x EBITDA

    Value per shareUSD 272.07

    80% of EV

    Terminal value, undiscounted
    USD 506.1bn
    Terminal value, discounted
    USD 205.5bn
    Enterprise value
    USD 257.6bn
    Less net debt
    USD 9.2bn
    Equity value
    USD 248.4bn

    Spread between methods: 60%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    7.95%199.22206.59215.50226.41240.02
    8.95%166.15170.46175.59181.75189.23
    9.95%141.17143.69146.66150.20154.43
    10.95%121.71123.12124.79126.80129.18
    11.95%106.16106.86107.73108.79110.08

    Outlined: this model. Green text: above today's price of 302.02. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputActualModelImplied
    Revenue growth, a year-4.1%11.3%20.2%
    EBIT margin51.9%40.7%74.9%
    Discount rate-10.0%6.6%
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.