Texas Instruments (NASDAQ:TXN) has had a great run on the share market with its stock up by a significant 11% over the last three months. We wonder if and what role the company's financials play in that price change as a company's long-term fundamentals usually dictate market outcomes. In this article, we decided to focus on Texas Instruments' ROE.
Return on equity or ROE is an important factor to be considered by a shareholder because it tells them how effectively their capital is being reinvested. In simpler terms, it measures the profitability of a company in relation to shareholder's equity.
How Is ROE Calculated?
ROE can be calculated by using the formula:
Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity
So, based on the above formula, the ROE for Texas Instruments is:
35% = US$5.9b ÷ US$17b (Based on the trailing twelve months to March 2024).
The 'return' is the profit over the last twelve months. So, this means that for every $1 of its shareholder's investments, the company generates a profit of $0.35.
What Has ROE Got To Do With Earnings Growth?
We have already established that ROE serves as an efficient profit-generating gauge for a company's future earnings. We now need to evaluate how much profit the company reinvests or "retains" for future growth which then gives us an idea about the growth potential of the company. Assuming all else is equal, companies that have both a higher return on equity and higher profit retention are usually the ones that have a higher growth rate when compared to companies that don't have the same features.
A Side By Side comparison of Texas Instruments' Earnings Growth And 35% ROE
First thing first, we like that Texas Instruments has an impressive ROE. Second, a comparison with the average ROE reported by the industry of 15% also doesn't go unnoticed by us. This likely paved the way for the modest 9.2% net income growth seen by Texas Instruments over the past five years.
We then compared Texas Instruments' net income growth with the industry and found that the company's growth figure is lower than the average industry growth rate of 31% in the same 5-year period, which is a bit concerning.
NasdaqGS:TXN Past Earnings Growth June 28th 2024
Earnings growth is a huge factor in stock valuation. What investors need to determine next is if the expected earnings growth, or the lack of it, is already built into the share price. By doing so, they will have an idea if the stock is headed into clear blue waters or if swampy waters await. One good indicator of expected earnings growth is the P/E ratio which determines the price the market is willing to pay for a stock based on its earnings prospects. So, you may want to check if Texas Instruments is trading on a high P/E or a low P/E, relative to its industry.
Is Texas Instruments Using Its Retained Earnings Effectively?
The high three-year median payout ratio of 53% (or a retention ratio of 47%) for Texas Instruments suggests that the company's growth wasn't really hampered despite it returning most of its income to its shareholders.
Besides, Texas Instruments has been paying dividends for at least ten years or more. This shows that the company is committed to sharing profits with its shareholders. Upon studying the latest analysts' consensus data, we found that the company's future payout ratio is expected to rise to 71% over the next three years. However, the company's ROE is not expected to change by much despite the higher expected payout ratio.
Conclusion
In total, it does look like Texas Instruments has some positive aspects to its business. Its earnings growth is decent, and the high ROE does contribute to that growth. However, investors could have benefitted even more from the high ROE, had the company been reinvesting more of its earnings. We also studied the latest analyst forecasts and found that the company's earnings growth is expected be similar to its current growth rate. To know more about the latest analysts predictions for the company, check out this visualization of analyst forecasts for the company.
德州儀器(納斯達克股票代碼:TXN)在股票市場上表現良好,其股票在過去三個月中大幅上漲了11%。我們想知道公司的財務狀況在價格變動中是否起着什麼作用,因爲公司的長期基本面通常決定市場業績。在本文中,我們決定重點關注德州儀器的投資回報率。
股本回報率或投資回報率是股東要考慮的重要因素,因爲它告訴他們資本再投資的有效性。簡而言之,它衡量公司相對於股東權益的盈利能力。
ROE 是如何計算的?
ROE 可以通過以下公式計算:
股本回報率 = 淨利潤(來自持續經營業務)÷ 股東權益
因此,根據上述公式,德州儀器的投資回報率爲:
35% = 59億美元 ÷ 170億美元(基於截至2024年3月的過去十二個月)。
“回報” 是過去十二個月的利潤。因此,這意味着公司每投資1美元,就會產生0.35美元的利潤。
投資回報率與收益增長有什麼關係?
我們已經確定,投資回報率是衡量公司未來收益的有效利潤指標。我們現在需要評估公司再投資或 “保留” 了多少利潤以用於未來的增長,這樣我們就可以了解公司的增長潛力。假設其他條件相同,與不具有相同特徵的公司相比,既有更高股本回報率又更高利潤保留率的公司通常是增長率更高的公司。
德州儀器的收益增長和35%的投資回報率的並排比較
首先,我們喜歡德州儀器的投資回報率令人印象深刻。其次,與該行業報告的平均投資回報率爲15%的比較也不會被我們忽視。這可能爲德州儀器在過去五年中實現的9.2%的溫和淨收入增長鋪平了道路。
然後,我們將德州儀器的淨收入增長與該行業進行了比較,發現該公司的增長數字低於同期31%的行業平均增長率,這有點令人擔憂。
NASDAQGS: TXN 過去的收益增長 2024 年 6 月 28 日
收益增長是股票估值的重要因素。投資者接下來需要確定的是,預期的收益增長或缺乏收益是否已經包含在股價中。通過這樣做,他們將知道股票是走向清澈的藍色海水還是沼澤水域在等着呢。衡量預期收益增長的一個很好的指標是市盈率,它根據收益前景決定了市場願意爲股票支付的價格。因此,您可能需要檢查德州儀器相對於其行業是高市盈率還是低市盈率。
德州儀器是否有效地使用了其留存收益?
德州儀器(Texas Instruments)的三年高派息率中位數爲53%(或47%的留存率),這表明儘管該公司將大部分收入返還給了股東,但其增長並沒有真正受到阻礙。
此外,德州儀器支付股息已有至少十年或更長時間。這表明該公司致力於與股東分享利潤。在研究了分析師的最新共識數據後,我們發現該公司的未來派息率預計將在未來三年內升至71%。但是,儘管預期的派息率較高,但該公司的投資回報率預計不會有太大變化。
結論
總的來說,德州儀器的業務看起來確實有一些積極的方面。其收益增長不錯,高投資回報率確實促進了這種增長。但是,如果該公司將更多的收益再投資,投資者本可以從高投資回報率中受益更多。我們還研究了最新的分析師預測,發現該公司的收益增長預計與其當前的增長率相似。要詳細了解分析師對公司的最新預測,請查看該公司的分析師預測的可視化。