Texas Instruments Incorporated (TXN) vs Zimmer Biomet Holdings, Inc. (ZBH): Which Is the Better Buy in 2026?
As of 2026-08-03, TXN is fairly valued at $268, with a DCF intrinsic value of $318 and a margin of safety of 16%. ZBH is fairly valued at $96, with an intrinsic value of $118 and a margin of safety of 19%. Of the two, ZBH has the wider margin of safety.
Rewards
- ★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.
- ★Gross margin of 70.2% indicates strong pricing power — typical of businesses with significant intellectual property or brand strength.
- ★Each dollar of retained earnings has created $3.16 of earning power — management is an exceptional capital allocator.
- ★Management has timed buybacks well — 3 out of 4 years showed value-accretive repurchases.
Risks
- ⚠Buybacks have been poorly timed — 3 out of 4 years involved repurchases at relatively expensive valuations.
- ⚠FCF yield of 1.4% is below 3%, meaning the market is pricing in substantial future growth to justify the current price.
- ⚠Trailing P/E of 40.7x is 50% above the historical average of 27.1x — the stock trades at a premium to its own history.
- ⚠FCF yield of 7.6% suggests reasonable valuation assuming continued moderate growth.
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 $268?
The market implies +20.3% Owner Earnings growth, above historical trends.
Standard FCF implies a demanding +25.1%, reflecting heavy growth investment.
What growth rate is the market pricing in at $96?
The market implies +5.4% Owner Earnings growth, below historical trends — potential opportunity.
Standard FCF implies a more demanding +6.3%, reflecting heavy growth investment expected to generate future returns.
Economic Moat Score
Learn more →Narrow moat with roic consistency as the key competitive advantage. Improving reinvestment efficiency would strengthen the moat.
Narrow moat with revenue predictability as the key competitive advantage. Improving roic consistency 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 pricing this stock without strong emotion in either direction"
"Market is pricing this stock without strong emotion in either direction"
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: TXN vs ZBH
Is Texas Instruments Incorporated or Zimmer Biomet Holdings, Inc. more undervalued in 2026?▼
Based on our discounted cash flow model, ZBH trades at a 18.8% margin of safety (intrinsic value $118 vs. price $96), compared to TXN's 15.5% margin of safety (intrinsic $318 vs. $268).
Which stock has a wider economic moat, Texas Instruments Incorporated or Zimmer Biomet Holdings, Inc.?▼
ZBH scores 68/100 (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 Zimmer Biomet Holdings, Inc. in financial distress?▼
ZBH's Altman Z-Score of 2.4 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, Texas Instruments Incorporated or Zimmer Biomet Holdings, Inc.?▼
Zimmer Biomet Holdings, Inc. (ZBH) generates a 7.6% free cash flow yield, compared to Texas Instruments Incorporated's 1.4%. 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, Texas Instruments Incorporated or Zimmer Biomet Holdings, Inc.?▼
TXN earns 20.4% ROIC versus ZBH's 6.5%. 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, Texas Instruments Incorporated's or Zimmer Biomet Holdings, Inc.'s?▼
ZBH's dividend earns a safety score of 85/100 (Very Safe), compared to TXN's 34/100 (Unsafe). ZBH has raised its dividend for 0 consecutive years.