Arthur J. Gallagher & Co. (AJG) vs Texas Instruments Incorporated (TXN): Which Is the Better Buy in 2026?
As of 2026-11-01, AJG is overvalued at $276, with a DCF intrinsic value of $231 and a margin of safety of -20%. TXN is undervalued at $301, with an intrinsic value of $391 and a margin of safety of 23%. Of the two, TXN has the wider margin of safety.
Rewards
- ★Free cash flow has grown at a 13.9% CAGR over the past 4 years, demonstrating strong earnings power growth.
- ★Each dollar of retained earnings has created $4.62 of earning power — management is an exceptional capital allocator.
- ★PEG ratio of 0.99 suggests the stock is undervalued relative to its growth rate — paying less than 1x for each unit of earnings growth.
- ★Texas Instruments Incorporated has maintained ROIC above 15% for 4 consecutive years, indicating a durable competitive advantage.
- ★Gross margin of 60.2% indicates strong pricing power — typical of businesses with significant intellectual property or brand strength.
- ★Return on equity has consistently exceeded 20% over 4 years, indicating efficient use of shareholder capital.
Risks
- ⚠Share count has increased by 21% over the past 4 years, diluting existing shareholders.
- ⚠Altman Z-Score of 1.31 places the company in the distress zone — financial patterns resemble those of companies that experienced bankruptcy.
- ⚠Insiders have sold $7.6M worth of stock in the past 3 months — significant insider liquidation.
- ⚠Buybacks have been poorly timed — 3 out of 4 years involved repurchases at relatively expensive valuations.
- ⚠FCF yield of 1.7% is below 3%, meaning the market is pricing in substantial future growth to justify the current price.
- ⚠Trailing P/E of 39.0x is 44% above the historical average of 27.1x — the stock trades at a premium to its own history.
Key Valuation Metrics
Learn more →Historical Fundamentals
Learn more →Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.
Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.
Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.
$1 Retained Earnings Test
Learn more →> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
Buffett's "$1 Test": For every $1 of earnings retained, has management created at least $1 of market value?
> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
Discounted Cash Flow (DCF) Analysis
Learn more →Reverse DCF — Market-Implied Growth
Learn more →Requires positive FCF to compute implied growth rate.
What growth rate is the market pricing in at $301?
The market implies +21.8% Owner Earnings growth, above historical trends.
Standard FCF implies a demanding +22.4%, reflecting heavy growth investment.
Economic Moat Score
Learn more →Narrow moat with revenue predictability as the key competitive advantage. Improving roic consistency would strengthen the moat.
Narrow moat with roic consistency as the key competitive advantage. Improving reinvestment efficiency would strengthen the moat.
Forensic Accounting
Learn more →M-Score Trend
M-Score Trend
Beneish's 8-variable model estimates the probability of earnings manipulation. An M-Score above -1.78 signals elevated risk — companies in this range have historically been 3-5× more likely to be manipulating earnings. Scores between -2.22 and -1.78 fall in a grey zone warranting further investigation.
Ownership Breakdown
Learn more →High insider ownership aligns management incentives with shareholders. Institutional concentration can indicate smart-money conviction but also crowding risk.
Insider Buying Activity
Learn more →Open market purchases · includes direct & indirect ownership · excludes option exercises.
Insider Selling Activity
Learn more →Direct ownership only · excludes indirect, option exercises, planned (10b5-1) sales & derivatives.
🎭 Mr. Market's Mood
Learn more →"Market is optimistic — be cautious and ensure you have a margin of safety"
"Market is optimistic — be cautious and ensure you have a margin of safety"
Composite sentiment score based on market signals. Inspired by Buffett’s "Mr. Market" allegory — fear = potential opportunity, greed = potential risk. Must be used alongside fundamental analysis, not in isolation.
⚖️ Buffett Signal
Learn more →The Buffett Signal cross-references market sentiment with DCF valuation. Configure the DCF Analysis above to generate a signal.
The Buffett Signal cross-references market sentiment with DCF valuation. Configure the DCF Analysis above to generate a signal.
Frequently Asked Questions: AJG vs TXN
Is Arthur J. Gallagher & Co. or Texas Instruments Incorporated more undervalued in 2026?▼
Based on our discounted cash flow model, TXN trades at a 23.1% margin of safety (intrinsic value $391 vs. price $301), compared to AJG's -19.6% margin of safety (intrinsic $231 vs. $276).
Which stock has a wider economic moat, Arthur J. Gallagher & Co. or Texas Instruments Incorporated?▼
AJG scores 62/100 (Narrow moat), while TXN scores 48/100 (Narrow moat). The moat score measures competitive advantage durability across ROIC consistency, margin stability, revenue predictability, and reinvestment efficiency.
Is Arthur J. Gallagher & Co. in financial distress?▼
AJG's Altman Z-Score of 1.3 places it in the Distress zone, signaling elevated bankruptcy risk. TXN scores 8.7 (Safe zone). The Altman Z-Score is a five-factor model that predicts insolvency within two years; scores below 1.81 indicate significant distress.
Which stock has higher return on invested capital, Arthur J. Gallagher & Co. or Texas Instruments Incorporated?▼
TXN earns 23.8% ROIC versus AJG's 6.8%. A higher ROIC means the company generates more profit per dollar of capital employed, a hallmark of durable competitive advantage in Buffett-style analysis.
Which dividend is safer, Arthur J. Gallagher & Co.'s or Texas Instruments Incorporated's?▼
AJG's dividend earns a safety score of 88/100 (Very Safe), compared to TXN's 34/100 (Unsafe). AJG has raised its dividend for 1 consecutive years.