Texas Instruments Inc. (NASDAQ:TXN)

A consistent decline in profitability ratios is observed across the examined period, spanning from March 31, 2022, to December 31, 2025. This trend is evident in all measured metrics – gross profit margin, operating profit margin, net profit margin, return on equity, and return on assets – indicating a systematic reduction in the company’s ability to generate profit from its revenue and assets.

Gross Profit Margin

The gross profit margin demonstrates a steady decrease, moving from 68.68% in March 2022 to 57.02% in December 2025. While the initial decline is moderate, the rate of decrease appears to accelerate in the later periods, suggesting increasing cost pressures or declining pricing power. The margin stabilized somewhat between March 2025 and December 2025.

Operating Profit Margin

The operating profit margin follows a similar downward trajectory, decreasing from 50.55% in March 2022 to 34.06% in December 2025. This decline is more pronounced than that of the gross profit margin, indicating that operating expenses are increasing at a faster rate than revenue, or are not being effectively managed. The rate of decline appears consistent throughout the period.

Net Profit Margin

The net profit margin exhibits the most substantial decline, falling from 43.34% in March 2022 to 28.28% in December 2025. This suggests that factors beyond core operations, such as interest expenses or taxes, are also contributing to the reduced profitability. The decline mirrors the trends observed in the gross and operating profit margins, but with a greater magnitude.

Return on Equity (ROE)

Return on equity decreased significantly from 58.62% in March 2022 to 30.73% in December 2025. This indicates a diminishing ability to generate profits from shareholder investments. The most substantial declines occurred between March 2023 and December 2023, and then again between March 2024 and December 2024. A slight recovery is observed between March 2025 and June 2025, but this is not sustained.

Return on Assets (ROA)

The return on assets also shows a consistent decline, moving from 32.51% in March 2022 to 14.46% in December 2025. This suggests a decreasing efficiency in utilizing assets to generate profits. The rate of decline is relatively consistent throughout the period, with minimal fluctuation. The ROA appears to have reached a plateau in the latter part of 2025.

Overall, the observed trends indicate a weakening profitability position. The consistent declines across all ratios suggest systemic challenges impacting the company’s financial performance. Further investigation is warranted to determine the underlying causes of these declines and to assess the potential impact on future financial results.

The gross profit margin exhibited a generally declining trend over the observed period, spanning from March 31, 2022, to December 31, 2025. Initially, the margin demonstrated relative stability at a high level, followed by a consistent decrease throughout the period.

Initial Period (Mar 31, 2022 – Sep 30, 2022)

The gross profit margin began at 68.68% and increased slightly to 69.51% by September 30, 2022. This indicates a period of strong profitability, with minimal fluctuation in the percentage of revenue retained as gross profit.

Downward Trend (Dec 31, 2022 – Dec 31, 2024)

From December 31, 2022, a consistent downward trend became apparent. The gross profit margin decreased from 68.76% to 58.14% by December 31, 2024. This suggests increasing costs of goods sold relative to revenue, or potentially pricing pressures.

Stabilization and Slight Recovery (Mar 31, 2025 – Dec 31, 2025)

The rate of decline appeared to moderate in the latter part of the period. The margin reached a low of 57.02% in December 2025, with a slight increase to 58.02% and 57.48% in the preceding quarters. This suggests potential stabilization, although the margin remained significantly lower than in the initial period.

Gross Profit and Revenue Relationship

While the gross profit margin declined, both gross profit and revenue experienced fluctuations. Revenue decreased overall from $4,905 million in March 2022 to $4,423 million in December 2025. The decline in gross profit margin, coupled with the revenue decrease, indicates a combined effect on overall profitability.

The observed trend warrants further investigation into the underlying factors contributing to the decreasing gross profit margin. These factors could include changes in input costs, manufacturing efficiencies, pricing strategies, or product mix.

The operating profit margin exhibited a clear downward trend over the observed period, spanning from March 31, 2022, to December 31, 2025. Initially strong, the margin experienced consistent declines, with periods of stabilization followed by further erosion. A detailed examination reveals specific phases in this evolution.

Initial Period (Mar 31, 2022 – Sep 30, 2022)

The operating profit margin began at 50.55% and demonstrated relative stability, peaking at 51.84% in September 2022. This suggests a period of robust operational efficiency and pricing power. Fluctuations within this timeframe were minimal.

Moderate Decline (Dec 31, 2022 – Jun 30, 2023)

A noticeable decline commenced in December 2022, falling to 41.85% by September 2023. The margin decreased from 50.63% to 46.54% in the first half of 2023, indicating increasing cost pressures or reduced pricing flexibility. This period represents a shift in the company’s profitability.

Accelerated Erosion (Sep 30, 2023 – Dec 31, 2024)

The rate of decline accelerated during this phase, with the operating profit margin decreasing from 44.03% to 34.94%. This suggests that the factors impacting profitability intensified, potentially including increased competition, rising input costs, or a shift in product mix towards lower-margin items. The decline was consistent quarter over quarter.

Stabilization and Slight Recovery (Mar 31, 2025 – Dec 31, 2025)

The final period shows a slight stabilization, with the margin fluctuating between 34.29% and 34.89% before concluding at 34.06%. While still significantly lower than the initial values, this suggests a potential bottoming out of the decline, although substantial recovery was not observed within the analyzed timeframe. The margin remained relatively flat in the last two quarters.

Overall, the operating profit margin experienced a substantial decrease throughout the period. While a degree of stabilization is apparent towards the end of the observation window, the margin remains considerably lower than its initial levels. Further investigation would be required to determine the underlying drivers of this trend and assess the sustainability of the recent stabilization.

The net profit margin exhibited a generally declining trend over the observed period, spanning from March 31, 2022, to December 31, 2025. Initial values were consistently high, but progressively decreased throughout the analysis timeframe.

Initial Period (Mar 31, 2022 – Dec 31, 2022)

The net profit margin began at 43.34% and demonstrated relative stability, peaking at 44.21% in September 2022, before concluding the period at 43.68%. This indicates a period of strong profitability.

First Decline (Mar 31, 2023 – Dec 31, 2023)

A noticeable downward trend commenced in the first quarter of 2023, with the net profit margin decreasing from 42.33% to 37.16% by the end of the year. This suggests increasing costs or decreasing revenue, or a combination of both, impacting profitability.

Continued Erosion (Mar 31, 2024 – Dec 31, 2024)

The decline continued into 2024, with the net profit margin falling from 35.16% to 30.68%. The rate of decline appeared to accelerate during this period.

Stabilization and Final Period (Mar 31, 2025 – Dec 31, 2025)

The rate of decrease slowed somewhat in 2025, with the net profit margin moving from 30.36% to 28.28%. While still declining, the magnitude of the decrease was smaller compared to the previous year. The final reported value of 28.28% represents the lowest point observed within the analyzed timeframe.

The consistent decrease in net profit margin warrants further investigation into the underlying factors contributing to this trend. Potential areas of inquiry include cost of goods sold, operating expenses, and pricing strategies. The observed pattern suggests a gradual erosion of profitability, despite fluctuations in revenue.

The Return on Equity (ROE) exhibited a generally declining trend over the observed period, beginning in March 2022 and continuing through December 2024, before showing some stabilization in the most recent periods. Initial values were strong, but subsequent quarters demonstrate a consistent reduction in this profitability metric.

Initial Performance (Mar 31, 2022 – Dec 31, 2022)

ROE began the period at 58.62% and peaked at 61.52% in September 2022. Throughout this timeframe, the ROE remained consistently high, fluctuating within a relatively narrow range, indicating strong profitability relative to shareholder equity. A slight decrease was observed in the final quarter of 2022, falling to 60.02%.

Declining Trend (Mar 31, 2023 – Dec 31, 2024)

A clear downward trend in ROE became apparent starting in March 2023. The metric decreased from 54.16% to 30.86% by June 2024. This decline suggests a weakening in the company’s ability to generate profits from shareholder investments. The rate of decline appeared to accelerate during this period.

Stabilization (Mar 31, 2025 – Dec 31, 2025)

The rate of decline in ROE appeared to moderate in the latter part of the observed period. Values fluctuated between 29.70% and 30.73% from March 2025 through December 2025, indicating a potential stabilization, although still significantly lower than the initial values. The final reported ROE for December 2025 was 30.73%.

Relationship to Underlying Components

The decline in ROE is likely attributable to a combination of factors, including decreasing net income and increasing stockholders’ equity. While stockholders’ equity consistently increased throughout the period, net income experienced a more pronounced decline, particularly after December 2022. This suggests that the growth in equity did not translate into proportional growth in earnings, contributing to the observed reduction in ROE.

Overall, the analysis indicates a shift in the company’s profitability profile. While initially demonstrating strong returns on equity, a consistent decline has been observed, with some indication of stabilization in the most recent quarters. Further investigation into the drivers of net income and equity changes is warranted to fully understand the underlying causes of this trend.

The Return on Assets (ROA) exhibited a generally declining trend over the observed period, spanning from March 31, 2022, to December 31, 2025. Initial values were strong, but subsequent quarters demonstrate a consistent reduction in the ratio.

Initial Performance (Mar 31, 2022 – Jun 30, 2022)

The ROA began at 32.51% and peaked at 34.69% in June 2022. This represents a period of high profitability relative to the company’s asset base. The increase suggests efficient asset utilization and strong net income generation during this timeframe.

Declining Trend (Sep 30, 2022 – Dec 31, 2023)

From September 2022 through December 2023, a consistent downward trend in ROA is evident. The ratio decreased from 34.25% to 20.12%. This decline indicates a weakening in the company’s ability to generate profit from its assets, potentially due to decreasing net income, increasing asset levels, or a combination of both. The rate of decline appears to accelerate in the latter half of this period.

Stabilization and Slight Fluctuation (Mar 31, 2024 – Dec 31, 2025)

Following the substantial decline, the ROA stabilized somewhat, fluctuating between 13.51% and 16.93% from March 2024 to December 2025. While the ratio did not return to earlier levels, the rate of decrease slowed considerably. The final reported ROA value of 14.46% suggests a potential leveling off, though continued monitoring is warranted. The slight increase in the final quarter does not represent a significant reversal of the overall trend.

Net Income and Total Assets Relationship

The decline in ROA correlates with both a decrease in net income and an increase in total assets. While net income decreased from US$2,201 million in March 2022 to US$1,163 million in December 2025, total assets increased from US$25,276 million to US$34,585 million over the same period. This suggests that the company is deploying more capital, but generating proportionally less profit from that capital.

In summary, the ROA demonstrates a clear pattern of decline over the analyzed period. While a degree of stabilization is observed in the most recent quarters, the ratio remains significantly lower than its initial values. Further investigation into the drivers of both net income and asset growth is recommended to understand the underlying causes of this trend.