TE Connectivity (NYSE:TEL) and Texas Instruments (NASDAQ:TXN) are both large-cap computer and technology companies, but which is the better business? We will compare the two businesses based on the strength of their earnings, institutional ownership, dividends, risk, profitability, analyst recommendations and valuation.
Insider & Institutional Ownership
91.4% of TE Connectivity shares are held by institutional investors. Comparatively, 83.1% of Texas Instruments shares are held by institutional investors. 0.8% of TE Connectivity shares are held by company insiders. Comparatively, 0.7% of Texas Instruments shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.
Dividends
TE Connectivity pays an annual dividend of $1.92 per share and has a dividend yield of 1.5%. Texas Instruments pays an annual dividend of $4.08 per share and has a dividend yield of 2.4%. TE Connectivity pays out 45.1% of its earnings in the form of a dividend. 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. TE Connectivity has raised its dividend for 10 consecutive years and Texas Instruments has raised its dividend for 17 consecutive years. Texas Instruments is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Profitability
This table compares TE Connectivity and Texas Instruments' net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
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TE Connectivity | -1.98% | 14.86% | 7.37% |
Texas Instruments | 36.24% | 61.05% | 28.06% |
Analyst Ratings
This is a summary of recent ratings for TE Connectivity and Texas Instruments, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
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TE Connectivity | 0 | 3 | 10 | 0 | 2.77 |
Texas Instruments | 4 | 10 | 14 | 0 | 2.36 |
TE Connectivity presently has a consensus price target of $110.9231, indicating a potential downside of 11.92%. Texas Instruments has a consensus price target of $166.5185, indicating a potential downside of 2.35%. Given Texas Instruments' higher possible upside, analysts clearly believe Texas Instruments is more favorable than TE Connectivity.
Volatility and Risk
TE Connectivity has a beta of 1.41, indicating that its stock price is 41% more volatile than the S&P 500. Comparatively, Texas Instruments has a beta of 1.06, indicating that its stock price is 6% more volatile than the S&P 500.
Valuation & Earnings
This table compares TE Connectivity and Texas Instruments' gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
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TE Connectivity | $12.17 billion | 3.42 | $-241,000,000.00 | $4.26 | 29.56 |
Texas Instruments | $14.38 billion | 10.91 | $5.02 billion | $5.24 | 32.54 |
Texas Instruments has higher revenue and earnings than TE Connectivity. TE Connectivity is trading at a lower price-to-earnings ratio than Texas Instruments, indicating that it is currently the more affordable of the two stocks.
Summary
Texas Instruments beats TE Connectivity on 12 of the 17 factors compared between the two stocks.