Texas Instruments’ Steep Uphill Battle

From the looks of its Required Business Performance and its historical ability to produce similar levels of revenue, it would seem Texas Instruments (TXN) is all but certain to fail to produce the level of performance its stock price currently implies. With its stock at $25.44, TI will need to produce revenue of $11.4 billion in the next year. Can this be done? It represents growth of 15.4% over the previous twelve months’ revenue of $9.9 billion and this rate of growth will need to continue for several years. This seems pretty steep considering that the company’s revenue has actually declined in each of the last three twelve month periods. Take a look at the company’s RBP Snapshot

Nevertheless, analysts are optimistic for the company’s future and some are even predicting sales increases that would allow the company to meet its Required Business Performance. In essence, they are expecting a huge turnaround. This isn’t out of question. The company is in good financial condition and has been boosting margins, albeit on declining levels of sales.

So is there reason to believe, on the basis of the company’s product line, that the sales trend will suddenly reverse to such an extent that the company can meet its Required Business Performance?