NRG Energy, Inc. (NRG) vs Texas Instruments Incorporated (TXN): Which Is the Better Buy in 2026?
As of 2026-06-19, NRG is fairly valued at $135, with a DCF intrinsic value of $136 and a margin of safety of 1%. TXN is overvalued at $323, with an intrinsic value of $283 and a margin of safety of -14%. Of the two, NRG has the wider margin of safety.
Rewards
- ★Share count has been reduced by 17% over the past 4 years through buybacks, increasing each share's claim on earnings.
- ★PEG ratio of 0.45 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.
- ★Return on equity has consistently exceeded 20% over 4 years, indicating efficient use of shareholder capital.
- ★Altman Z-Score of 8.73 indicates very low bankruptcy risk — the company is firmly in the safe zone.
Risks
- ⚠ROIC has declined by 5.4 percentage points over the past 4 years, which may signal competitive erosion.
- ⚠Gross margin of 16.4% is low, suggesting a competitive or commodity-like market with limited pricing power.
- ⚠FCF yield of 2.7% is below 3%, meaning the market is pricing in substantial future growth to justify the current price.
- ⚠Buybacks have been poorly timed — 3 out of 4 years involved repurchases at relatively expensive valuations.
- ⚠FCF yield of 0.9% is below 3%, meaning the market is pricing in substantial future growth to justify the current price.
- ⚠Trailing P/E of 55.3x is 104% 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 →What growth rate is the market pricing in at $135?
The market implies +22.7% Owner Earnings growth, above historical trends.
Standard FCF implies a demanding +24.4%, reflecting heavy growth investment.
What growth rate is the market pricing in at $323?
The market implies +22.8% Owner Earnings growth, above historical trends.
Standard FCF implies a demanding +32.1%, reflecting heavy growth investment.
Economic Moat Score
Learn more →Narrow moat with reinvestment efficiency as the key competitive advantage. Improving margin stability 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
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 →No ownership data available.
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 pessimistic — investigate whether fears are temporary or structural"
"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: NRG vs TXN
Is NRG Energy, Inc. or Texas Instruments Incorporated more undervalued in 2026?▼
Based on our discounted cash flow model, NRG trades at a 0.7% margin of safety (intrinsic value $136 vs. price $135), compared to TXN's -13.9% margin of safety (intrinsic $283 vs. $323).
Which stock has a wider economic moat, NRG Energy, Inc. or Texas Instruments Incorporated?▼
TXN scores 48/100 (Narrow moat), while NRG scores 42/100 (Narrow moat). The moat score measures competitive advantage durability across ROIC consistency, margin stability, revenue predictability, and reinvestment efficiency.
Is NRG Energy, Inc. in financial distress?▼
NRG's Altman Z-Score of 2.2 places it in the Grey 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 company has better free cash flow, NRG Energy, Inc. or Texas Instruments Incorporated?▼
NRG Energy, Inc. (NRG) generates a 2.7% free cash flow yield, compared to Texas Instruments Incorporated's 0.9%. A higher FCF yield means the business converts more of its market value into cash that can be returned to shareholders or reinvested.
Which stock has higher return on invested capital, NRG Energy, Inc. or Texas Instruments Incorporated?▼
TXN earns 17.9% ROIC versus NRG's 3.3%. 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, NRG Energy, Inc.'s or Texas Instruments Incorporated's?▼
NRG's dividend earns a safety score of 94/100 (Very Safe), compared to TXN's 34/100 (Unsafe). NRG has raised its dividend for 3 consecutive years.