Texas Instruments (NASDAQ:TXN) and Broadcom (NASDAQ:AVGO) are both large-cap computer and technology companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, profitability, valuation, analyst recommendations, dividends, earnings and risk.
Earnings and Valuation
This table compares Texas Instruments and Broadcom's gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
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Texas Instruments | $14.38 billion | 10.44 | $5.02 billion | $5.24 | 31.15 |
Broadcom | $23.89 billion | 7.58 | $2.96 billion | $18.45 | 24.04 |
Texas Instruments has higher earnings, but lower revenue than Broadcom. Broadcom is trading at a lower price-to-earnings ratio than Texas Instruments, indicating that it is currently the more affordable of the two stocks.
Dividends
Texas Instruments pays an annual dividend of $4.08 per share and has a dividend yield of 2.5%. Broadcom pays an annual dividend of $14.40 per share and has a dividend yield of 3.2%. Texas Instruments pays out 77.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Broadcom pays out 78.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Texas Instruments has raised its dividend for 17 consecutive years and Broadcom has raised its dividend for 9 consecutive years.
Profitability
This table compares Texas Instruments and Broadcom's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
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Texas Instruments | 36.24% | 61.05% | 28.06% |
Broadcom | 12.39% | 35.23% | 10.61% |
Volatility and Risk
Texas Instruments has a beta of 1.06, meaning that its share price is 6% more volatile than the S&P 500. Comparatively, Broadcom has a beta of 1.05, meaning that its share price is 5% more volatile than the S&P 500.
Analyst Recommendations
This is a breakdown of recent recommendations and price targets for Texas Instruments and Broadcom, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
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Texas Instruments | 4 | 10 | 14 | 0 | 2.36 |
Broadcom | 0 | 5 | 23 | 0 | 2.82 |
Texas Instruments presently has a consensus price target of $166.5185, suggesting a potential upside of 2.00%. Broadcom has a consensus price target of $442.7692, suggesting a potential downside of 0.19%. Given Texas Instruments' higher probable upside, equities analysts plainly believe Texas Instruments is more favorable than Broadcom.
Insider & Institutional Ownership
83.1% of Texas Instruments shares are owned by institutional investors. Comparatively, 80.6% of Broadcom shares are owned by institutional investors. 0.7% of Texas Instruments shares are owned by company insiders. Comparatively, 3.0% of Broadcom shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
Summary
Texas Instruments beats Broadcom on 10 of the 17 factors compared between the two stocks.