Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Texas Instruments Incorporated's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 10.7% to 1.7% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 37, DPO 42, DIO 197). At a 9.1% WACC with mid-year discounting, the terminal value (92% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 30.6x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $416.91 per share, suggesting TXN is undervalued by 112.9% at the current price of $195.79.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 7,911 | 8,725 | 9,663 | 11,744 | 11,945 | 12,244 |
| (−) Net Interest | 407 | 449 | 497 | 605 | 615 | 630 |
| (+) D&A | 3,940 | 4,331 | 4,746 | 4,811 | 5,159 | 5,288 |
| EBITDA | 12,259 | 13,505 | 14,906 | 17,160 | 17,719 | 18,162 |
| (−) Tax | 986 | 1,088 | 1,205 | 1,464 | 1,489 | — |
| (−) CapEx | 4,418 | 4,872 | 5,396 | 6,558 | 6,671 | — |
| (−) ΔWC | -941 | 521 | 601 | 1,334 | 129 | — |
| Free Cash Flow (FCF) | 7,795 | 7,024 | 7,705 | 7,803 | 9,430 | — |
| Peers' EBITDA Multiple | 30.6x | |||||
| Terminal Value | 556,480 | |||||
| WACC / Discount Rate | 9.05% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 7,465 | 6,168 | 6,204 | 5,763 | 6,386 | 360,877 |
| Enterprise Value | 392,863 | |||||
| Projection Period | 31,986 | 8.1% | ||||
| Terminal Value | 360,877 | 91.9% | ||||
| (−) Current Net Debt | 12,166 | |||||
| Equity Value | 380,697 | |||||
| (÷) Outstanding Shares | 913M | |||||
| Fair Price | $417 | +113.0% | ||||
| WACC \ EV/EBITDA Exit Multiple | 26.6x | 28.6x | 30.6x | 32.6x | 34.6x |
|---|---|---|---|---|---|
| 7.0% | $400 | $429 | $457 | $485 | $513 |
| 8.0% | $382 | $409 | $436 | $463 | $490 |
| 9.0% | $365 | $391 | $417 | $443 | $469 |
| 10.0% | $349 | $374 | $399 | $423 | $448 |
| 11.0% | $334 | $358 | $381 | $405 | $428 |
Current price: $195.79. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.