Texas Instruments (TXN) vs. Xperi (XPER) Critical Analysis

Texas Instruments (NASDAQ:TXN) and Xperi (NASDAQ:XPER) are both computer and technology companies, but which is the better business? We will compare the two businesses based on the strength of their risk, valuation, institutional ownership, earnings, dividends, profitability and analyst recommendations.

Valuation & Earnings

This table compares Texas Instruments and Xperi’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Texas Instruments $15.78 billion 6.56 $5.58 billion $5.42 20.35
Xperi $406.13 million 2.89 -$280,000.00 $2.48 9.59

Texas Instruments has higher revenue and earnings than Xperi. Xperi is trading at a lower price-to-earnings ratio than Texas Instruments, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Texas Instruments and Xperi’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Texas Instruments 34.84% 55.48% 29.93%
Xperi 1.92% 20.08% 9.94%

Dividends

Texas Instruments pays an annual dividend of $3.08 per share and has a dividend yield of 2.8%. Xperi pays an annual dividend of $0.80 per share and has a dividend yield of 3.4%. Texas Instruments pays out 56.8% of its earnings in the form of a dividend. Xperi pays out 32.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Texas Instruments has raised its dividend for 15 consecutive years. Xperi is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a summary of current ratings and recommmendations for Texas Instruments and Xperi, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Texas Instruments 2 16 8 0 2.23
Xperi 0 0 4 0 3.00

Texas Instruments currently has a consensus target price of $110.36, suggesting a potential upside of 0.06%. Xperi has a consensus target price of $30.25, suggesting a potential upside of 27.21%. Given Xperi’s stronger consensus rating and higher probable upside, analysts plainly believe Xperi is more favorable than Texas Instruments.

Volatility and Risk

Texas Instruments has a beta of 1.2, indicating that its stock price is 20% more volatile than the S&P 500. Comparatively, Xperi has a beta of 0.26, indicating that its stock price is 74% less volatile than the S&P 500.

Insider & Institutional Ownership

86.7% of Texas Instruments shares are owned by institutional investors. Comparatively, 95.0% of Xperi shares are owned by institutional investors. 0.9% of Texas Instruments shares are owned by insiders. Comparatively, 1.8% of Xperi shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Summary

Texas Instruments beats Xperi on 11 of the 17 factors compared between the two stocks.

Texas Instruments Company Profile

Texas Instruments Incorporated designs, manufactures, and sells semiconductors to electronics designers and manufacturers worldwide. It operates in two segments, Analog and Embedded Processing. The Analog segment offers power products to manage power requirements in various levels using battery management solutions, portable components, power supply controls, point-of-load products, switches and interfaces, integrated protection devices, high-voltage products, and mobile lighting and display products. This segment also provides signal chain products that sense, condition, and measure signals to allow information to be transferred or converted for further processing and control for use in amplifier, data converter, interface product, motor drive, clock, and sensing product end-markets; and integrated analog and standard products, which are primarily for sale into personal electronics, industrial, and automotive markets. The Embedded Processing segment offers connected microcontrollers, such as microcontrollers, microcontrollers with integrated wireless capabilities, and stand-alone wireless connectivity solutions that are used in electronic equipment to sense, connect, log, and transfer data; digital signal processors for mathematical computations; and applications processors for specific computing activity. This segment offers products for use in various markets, principally industrial and automotive. The company also provides DLP products, primarily for use in projectors to create high-definition images; calculators; and application-specific integrated circuits. Texas Instruments Incorporated markets and sells its semiconductor products through direct sales and distributors, as well as online. The company was founded in 1930 and is headquartered in Dallas, Texas.

Xperi Company Profile

Xperi Corporation, through its subsidiaries, creates, develops, and licenses audio, imaging, semiconductor packaging, and interconnect technologies in the United States, South Korea, Taiwan, Japan, Europe, the Middle East, and internationally. The company operates in two segments, Product Licensing; and Semiconductor and IP Licensing. The Product Licensing segment licenses technologies and intellectual property related to audio, digital radio, and imaging solutions under the DTS, FotoNation, HD Radio, and IMAX Enhanced brands. It delivers software and hardware based solutions combined with various other intellectual property to its customers or to their suppliers. This segment serves consumer electronics product manufacturers. The Semiconductor and IP Licensing segment develops and licenses semiconductor technologies and intellectual property to manufacturers, foundries, subcontract assemblers, and others. It develops and licenses 3D semiconductor packaging, interconnect, and bonding solutions for semiconductors that are used in smartphones, tablets, and laptops, as well as servers used in datacenters. This segment also provides engineering services. The company was formerly known as Tessera Holding Corporation and changed its name to Xperi Corporation in February 2017. Xperi Corporation was founded in 1990 and is headquartered in San Jose, California.

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