NEW YORK (TheStreet) -- Texas Instruments (TXN) - Get Free Report stock is falling 0.58% to $58.08 on heavy trading volume on Wednesday after reports suggested the company may acquire its competitor Maxim Integrated Products (MXIM), according to Bloomberg.
Maxim may seek a high premium since Analog Devices (ADI) has also shown interest in acquiring the company, sources told Bloomberg.
The semiconductor industry has seen many mergers and acquisitions this year as companies face a shrinking customer base and rising costs, Bloomberg noted.
Texas Instruments, which makes analog chips as well as other semiconductors, has not made a large acquisition since 2011, when it acquired National Semiconductor for about $6.5 billion.
"If we were to look at an acquisition, it would probably be a company that's going to be broad in catalog, have a diverse customer base, have a large percentage of its revenue coming from industrial and automotive, probably have a very talented R&D team," Texas Instruments CFO Kevin March said during the company's 2015 third quarter earnings call last week.
So far today, 9.66 million shares of Texas Instruments have exchanged hands, compared with its average daily volume of 8.11 million shares.
Separately, TheStreet Ratings team rates TEXAS INSTRUMENTS INC as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:
We rate TEXAS INSTRUMENTS INC (TXN) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, notable return on equity, solid stock price performance and expanding profit margins. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The current debt-to-equity ratio, 0.41, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, TXN has a quick ratio of 1.69, which demonstrates the ability of the company to cover short-term liquidity needs.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. When compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, TEXAS INSTRUMENTS INC's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
- TEXAS INSTRUMENTS INC reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, TEXAS INSTRUMENTS INC increased its bottom line by earning $2.58 versus $1.92 in the prior year. This year, the market expects an improvement in earnings ($2.71 versus $2.58).
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- Despite the weak revenue results, TXN has outperformed against the industry average of 13.4%. Since the same quarter one year prior, revenues slightly dropped by 2.0%. Weakness in the company's revenue seems to not be hurting the bottom line, shown by stable earnings per share.
- You can view the full analysis from the report here: TXN