In today's rapidly changing and fiercely competitive business landscape, it is essential for investors and industry enthusiasts to thoroughly analyze companies. In this article, we will conduct a comprehensive industry comparison, evaluating Taiwan Semiconductor TSM against its key competitors in the Semiconductors & Semiconductor Equipment industry. By examining key financial metrics, market position, and growth prospects, we aim to provide valuable insights for investors and shed light on company's performance within the industry.
Taiwan Semiconductor Background
Taiwan Semiconductor Manufacturing Co. is the world's largest dedicated chip foundry, with almost 60% market share. TSMC was founded in 1987 as a joint venture of Philips, the government of Taiwan, and private investors. It went public as an ADR in the U.S. in 1997. TSMC's scale and high-quality technology allow the firm to generate solid operating margins, even in the highly competitive foundry business. Furthermore, the shift to the fabless business model has created tailwinds for TSMC. The foundry leader has an illustrious customer base, including Apple, AMD, and Nvidia, that looks to apply cutting-edge process technologies to its semiconductor designs. TSMC employs more than 73,000 people.
| Company | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| Taiwan Semiconductor Manufacturing Co Ltd | 29.33 | 7.02 | 11.37 | 6.38% | $428.26 | $314.51 | 16.52% |
| NVIDIA Corp | 79.09 | 54.01 | 38.63 | 32.23% | $14.56 | $16.79 | 265.28% |
| Broadcom Inc | 52.48 | 9.31 | 15.86 | 2.81% | $4.61 | $7.38 | 34.17% |
| Advanced Micro Devices Inc | 235.68 | 4.68 | 11.64 | 0.22% | $0.9 | $2.56 | -11.27% |
| Qualcomm Inc | 25.77 | 8.81 | 5.98 | 9.79% | $3.08 | $5.28 | 1.23% |
| Texas Instruments Inc | 30.37 | 10.45 | 10.63 | 6.52% | $1.77 | $2.1 | -16.4% |
| Intel Corp | 33.02 | 1.29 | 2.46 | -0.36% | $1.83 | $5.22 | -17.41% |
| ARM Holdings PLC | 394.03 | 22.45 | 36.92 | 4.35% | $0.06 | $0.89 | 12.62% |
| Analog Devices Inc | 38.24 | 2.99 | 9.31 | 1.3% | $1.12 | $1.47 | -22.68% |
| Microchip Technology Inc | 27.08 | 7.65 | 6.76 | 2.25% | $0.39 | $0.79 | -24.91% |
| STMicroelectronics NV | 10.75 | 2.21 | 2.40 | 3.04% | $1.06 | $1.44 | -18.41% |
| Monolithic Power Systems Inc | 86.78 | 16.77 | 19.45 | 4.45% | $0.1 | $0.25 | 1.51% |
| ON Semiconductor Corp | 14.90 | 3.87 | 3.97 | 5.7% | $0.71 | $0.85 | -4.95% |
| GLOBALFOUNDRIES Inc | 33.65 | 2.67 | 4.25 | 1.19% | $0.54 | $0.39 | -15.86% |
| ASE Technology Holding Co Ltd | 21.17 | 2.52 | 1.27 | 1.94% | $23.55 | $20.87 | 1.46% |
| First Solar Inc | 20.40 | 3.02 | 5.87 | 5.38% | $0.36 | $0.35 | 15.58% |
| United Microelectronics Corp | 11.95 | 1.73 | 2.90 | 2.9% | $24.0 | $16.9 | 0.78% |
| Skyworks Solutions Inc | 17.72 | 2.37 | 3.34 | 2.91% | $0.31 | $0.42 | -9.29% |
| Lattice Semiconductor Corp | 45.88 | 14.42 | 14.39 | 2.15% | $0.03 | $0.1 | -23.6% |
| Universal Display Corp | 37.75 | 5.55 | 13.54 | 3.86% | $0.07 | $0.13 | 26.67% |
| MACOM Technology Solutions Holdings Inc | 114.16 | 7.01 | 11.51 | 1.45% | $0.04 | $0.1 | 6.98% |
| Rambus Inc | 17.66 | 6.30 | 13.78 | 3.24% | $0.05 | $0.09 | 3.61% |
| Average | 64.22 | 9.05 | 11.18 | 4.63% | $3.77 | $4.02 | 9.77% |
After a detailed analysis of Taiwan Semiconductor, the following trends become apparent:
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A Price to Earnings ratio of 29.33 significantly below the industry average by 0.46x suggests undervaluation. This can make the stock appealing for those seeking growth.
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With a Price to Book ratio of 7.02, significantly falling below the industry average by 0.78x, it suggests undervaluation and the possibility of untapped growth prospects.
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The stock's relatively high Price to Sales ratio of 11.37, surpassing the industry average by 1.02x, may indicate an aspect of overvaluation in terms of sales performance.
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The Return on Equity (ROE) of 6.38% is 1.75% above the industry average, highlighting efficient use of equity to generate profits.
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The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $428.26 Billion is 113.6x above the industry average, highlighting stronger profitability and robust cash flow generation.
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Compared to its industry, the company has higher gross profit of $314.51 Billion, which indicates 78.24x above the industry average, indicating stronger profitability and higher earnings from its core operations.
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With a revenue growth of 16.52%, which surpasses the industry average of 9.77%, the company is demonstrating robust sales expansion and gaining market share.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio gauges the extent to which a company has financed its operations through debt relative to equity.
Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.
When evaluating Taiwan Semiconductor alongside its top 4 peers in terms of the Debt-to-Equity ratio, the following insights arise:
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In terms of the debt-to-equity ratio, Taiwan Semiconductor has a lower level of debt compared to its top 4 peers, indicating a stronger financial position.
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This implies that the company relies less on debt financing and has a more favorable balance between debt and equity with a lower debt-to-equity ratio of 0.28.
Key Takeaways
For Taiwan Semiconductor, the PE and PB ratios are low compared to industry peers, indicating potential undervaluation. However, the PS ratio is high, suggesting rich valuation based on revenue. In terms of ROE, EBITDA, gross profit, and revenue growth, Taiwan Semiconductor outperforms its industry peers, reflecting strong profitability and growth potential.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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