Does Spreadtrum Communications, Inc (ADR) (SPRD) Get a Fair Price?

Published on June 25, 2013 at 11:21 am by The Motley Fool in News

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Texas Instruments Incorporated (NASDAQ:TXN) is the most expensive among the three companies–at $35 per share, it is worth around $38.8 billion on the market. The market values Texas Instruments at 10.6 times its trailing EBITDA. What makes investors excited about Texas Instruments is the increasing cash return to shareholders, via both share buybacks and dividends. In the first quarter, the company raised its dividends by 33% to $1.12 per share annualized. Moreover, the company also authorized an additional $5 billion to its stock buyback program. Texas Instruments Incorporated (NASDAQ:TXN) reported that increase in both share buyback and dividends was due to its confidence in the sustainability of the Analog and Embedded Processing business model. Looking forward to the second quarter, Texas Instruments has adjusted its revenue guidance from the range of $2.93 – $3.17 billion to a range of $2.99 billion – $3.11 billion. The net income in the second quarter was estimated to come in at $0.39 to $0.43 per share.

Spreadtrum is the most profitable company of the trio, with the highest return on invested capital at 18.51%. Texas Instruments ranked second with a return on invested capital at 10.75%. Infineon is the least profitable company, delivering the lowest return on invested capital at only 7.15%.

Texas Instruments might be a good pick

Spreadtrum Communications, Inc (ADR) (NASDAQ:SPRD) seems to get a decent offering price with a reasonable valuation. For income investors, Texas Instruments might be their favorite due to its potential increase in near future share buybacks and dividends. At the current trading price, investors could get juicy dividend yield at 3.2%.

The article Does Spreadtrum Get a Fair Price? originally appeared on Fool.com and is written by Anh Hoang.

Anh HOANG has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Anh is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.