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Luis Caselles Perez
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  • Texas Instruments Inc: Hold. Target $32, EPS Y2011 $2.6 est.

    During the past week, I have been analyzing Texas Instruments along with two of my friends. We determined the target price to be around $32 and our earnings estimates are $2.50 (2010Y) and $2.60 (2011Y). Our recommendation is "Hold".

    We believe Texas Instruments is a fundamentally strong firm, yet, too optimistic in growth prospects. Financial performance in the past years offered a glimpse into the strong backbone of its business, despite the economic downturn. The company remained profitable, increased critical investments in its core business segments and continued repurchasing stock.

    The firm continued its zero debt policy and their strong cash position enabled them to remain flexible and to seize opportunities. Margins remained virtually unchanged due to its flexible operations and cost reduction actions.

    Texas Instruments is investing heavily in its Analog segment, which accounts 40% of its revenues and is expected to grow 20% annually (according to TI’s press releases). This is nearly $1 billion in revenues just for the Analog business which is a tremendous figure to dream about. As you can see from the following graphs, we are far more conservative.

    1995 - 2015 Historical/Forecasted quarterly Revenue for the whole firm (inflation adjusted)

    2010 - 2015 Quarterly Revenue forecast, per segment:

    Noticeably, we believe that the main drivers for the firm are Analog and Embedded Processing. We decrease our prospects for the Wireless division due to the good performance of competitors Broadcom and the strategic problems that critical clients, such as Research in Motion or Nokia, are facing in the Smartphone market.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Dec 11 11:09 AM | Link | Comment!
  • Spain declares state of alert

    Spain’s First Deputy Prime Minister, Alfredo Rubalcaba, has declared the state of alert after hundreds of air controllers refused to work yesterday afternoon, thus paralyzing the entire Spanish air space. Yesterday night, the Spanish army was deployed in the 47 airports controlled by the government agency AENA, in order to take control of the situation.

     The situation is especially tense because of the timing of the impending action. Next week’s festivities (“Puente de la Constitución”) were the perfect setting for hundreds of thousands of travelers to go on a short holiday. However, airliners such as Iberia or Ryanair have been forced to cancel all the flights scheduled for today, thus leaving Spanish airports filled with the anger and frustration of the more than 350,000 affected persons.

    The situation is very exceptional, as this is the first time Spain declares such a status as a democratic nation. Under this situation, air controllers are obliged to fulfill their duties and reestablish the air space. Those who fail to do so will be accused of felony charges, disobedience, and may face up to 10 years of imprisonment.

    Most of the air controllers from Madrid Barajas Airport are hosted in the nearby Auditórium Hotel in Madrid, guarded by the Police in order to prevent any conflict between them and the stranded passengers.

    Disclosure: No Positions
    Dec 04 7:15 AM | Link | Comment!
  • [Follow up] Repsol YPF
    On July 1st, I wrote a recommendation note about Repsol YPF (click here), the Spanish oil company. (It is available at NYSE as an ADR). At that time, the stock price was 16.67€ (Madrid Stock Exchange, opening price).

    Approaching the winter months, there has been an increase in share price which is explained by the increase in oil demand and commodity prices. A vital point now is to see whether this can be sustained over the next 6 months.

    2 days ago, Repsol YPF announced an increase in dividend (17% growth with respect to last year's dividend), and the shape of the firm is still enviable as seen from the Q3 statements.

    On the negative side, negotiations with the government of Ecuador are heating up and Repsol YPF, along with Petrobras, is considering the possibility of leaving the country. 

    Disclosure: REP
    Tags: REPYY
    Nov 23 11:40 AM | Link | Comment!
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