In today's rapidly evolving and fiercely competitive business landscape, it is crucial for investors and industry analysts to conduct comprehensive company evaluations. In this article, we will undertake an in-depth industry comparison, assessing Taiwan Semiconductor TSM alongside its primary competitors in the Semiconductors & Semiconductor Equipment industry. By meticulously examining crucial financial indicators, market positioning, and growth potential, we aim to provide valuable insights to 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 | 29.35 | 7.03 | 11.37 | 6.38% | $428.26 | $314.51 | 16.52% |
| NVIDIA Corp | 64.66 | 55.31 | 34.54 | 32.31% | $17.75 | $20.41 | 262.12% |
| Broadcom Inc | 50.69 | 8.99 | 15.32 | 2.81% | $4.61 | $7.38 | 34.17% |
| Advanced Micro Devices Inc | 241.67 | 4.80 | 11.94 | 0.22% | $0.9 | $2.56 | -11.27% |
| Qualcomm Inc | 27.31 | 9.34 | 6.34 | 9.79% | $3.08 | $5.28 | 1.23% |
| Texas Instruments Inc | 30.48 | 10.49 | 10.67 | 6.52% | $1.77 | $2.1 | -16.4% |
| Intel Corp | 31.12 | 1.21 | 2.31 | -0.36% | $2.09 | $5.22 | 8.61% |
| ARM Holdings PLC | 416.31 | 23.89 | 39 | 4.35% | $0.06 | $0.89 | 46.6% |
| Analog Devices Inc | 53.74 | 3.24 | 11 | 0.85% | $0.93 | $1.18 | -33.83% |
| Microchip Technology Inc | 27.68 | 7.77 | 6.91 | 2.25% | $0.47 | $0.79 | -40.62% |
| STMicroelectronics NV | 10.50 | 2.16 | 2.34 | 3.04% | $1.06 | $1.44 | -18.41% |
| Monolithic Power Systems Inc | 88.67 | 17.13 | 19.88 | 4.45% | $0.1 | $0.25 | 1.51% |
| ON Semiconductor Corp | 14.72 | 3.82 | 3.92 | 5.7% | $0.71 | $0.85 | -4.95% |
| First Solar Inc | 29.01 | 4.29 | 8.34 | 5.38% | $0.36 | $0.35 | 15.58% |
| GLOBALFOUNDRIES Inc | 30.58 | 2.41 | 3.86 | 1.19% | $0.54 | $0.39 | -15.86% |
| ASE Technology Holding Co Ltd | 22.33 | 2.66 | 1.34 | 1.94% | $23.55 | $20.87 | 1.46% |
| United Microelectronics Corp | 12.78 | 1.85 | 3.10 | 2.9% | $24.0 | $16.9 | 0.78% |
| Skyworks Solutions Inc | 17.08 | 2.29 | 3.22 | 2.91% | $0.31 | $0.42 | -9.29% |
| Lattice Semiconductor Corp | 48.63 | 15.28 | 15.25 | 2.15% | $0.03 | $0.1 | -23.6% |
| Universal Display Corp | 38.22 | 5.62 | 13.70 | 3.86% | $0.07 | $0.13 | 26.67% |
| MACOM Technology Solutions Holdings Inc | 113.74 | 6.98 | 11.47 | 1.45% | $0.04 | $0.1 | 6.98% |
| Cirrus Logic Inc | 23.42 | 3.41 | 3.59 | 2.48% | $0.05 | $0.19 | -39.93% |
| Average | 66.35 | 9.19 | 10.86 | 4.58% | $3.93 | $4.18 | 9.12% |
Upon analyzing Taiwan Semiconductor, the following trends can be observed:
-
A Price to Earnings ratio of 29.35 significantly below the industry average by 0.44x suggests undervaluation. This can make the stock appealing for those seeking growth.
-
The current Price to Book ratio of 7.03, which is 0.76x the industry average, is substantially lower than the industry average, indicating potential undervaluation.
-
The stock's relatively high Price to Sales ratio of 11.37, surpassing the industry average by 1.05x, may indicate an aspect of overvaluation in terms of sales performance.
-
The Return on Equity (ROE) of 6.38% is 1.8% above the industry average, highlighting efficient use of equity to generate profits.
-
Compared to its industry, the company has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $428.26 Billion, which is 108.97x above the industry average, indicating stronger profitability and robust cash flow generation.
-
Compared to its industry, the company has higher gross profit of $314.51 Billion, which indicates 75.24x above the industry average, indicating stronger profitability and higher earnings from its core operations.
-
The company's revenue growth of 16.52% is notably higher compared to the industry average of 9.12%, showcasing exceptional sales performance and strong demand for its products or services.
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.
By considering the Debt-to-Equity ratio, Taiwan Semiconductor can be compared to its top 4 peers, leading to the following observations:
-
When considering the debt-to-equity ratio, Taiwan Semiconductor exhibits a stronger financial position compared to its top 4 peers.
-
This indicates that the company has a favorable balance between debt and equity, with a lower debt-to-equity ratio of 0.28, which can be perceived as a positive aspect by investors.
Key Takeaways
For Taiwan Semiconductor, the low PE and PB ratios suggest the stock may be undervalued compared to peers in the Semiconductors & Semiconductor Equipment industry. However, the high PS ratio indicates a premium valuation based on revenue. In terms of profitability, the high ROE, EBITDA, gross profit, and revenue growth reflect strong performance relative to industry competitors.
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.
Comments
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
