Did This Semiconductor Stock Just Find its Bottom?

TXN is down 11% year-to-date

Feb 25, 2022 at 12:19 PM
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The shares of Texas Instruments Incorporated (NASDAQ:TXN) have had a hard time staging a rebound since a bear note from Raymond James early last week put the equity at an annual low of $161.04. Yesterday's broad-market dip put TXN back within a few cents of this low at one point during the session, though the stock pulled in a win by end of day. Texas Instruments stock was last seen up 0.5% at $170.48 as it tests a recent ceiling at the $170 level, though it's still down 9.7% this year. 

txn chart feb 25

Despite this tepid price action, short sellers have been hitting the exits in droves. Short interest fell 21.9% in the last reporting period and now makes up a slim 1.6% of the stock's available float, or a little under three days' worth of pent-up buying power at TXN's average pace of trading. 

Analysts have yet to come around on the stock. Of the 17 analysts in coverage, just five say "strong buy," compared to 12 "hold" or worse ratings. 

Moreover, Texas Instruments looks to be an incredibly safe option for dividend investors. TXN provides a strong dividend yield of 2.78% with forward dividend of $4.60, as well as decently well-rounded fundamentals.

TXN currently holds a manageable balance sheet with $9.74 billion in cash and $8.21 billion in total debt. Texas Instruments has grown its annual revenues and net income 27% and 38%, respectively, since fiscal 2020. TXN is also expected to increase revenues by 3.9% and earnings by 3.1% for fiscal 2022, too. In addition, Texas Instruments stock has a forward price-earnings ratio 18.15, which is an intriguing valuation for a semiconductor company valued at $153.99 billion. However, TXN also trades at a price-sales ratio of 8.51, making its valuation less attractive but still offering a great long-term opportunity.

 

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