Amidst the fast-paced and highly competitive business environment of today, conducting comprehensive company analysis is essential for investors and industry enthusiasts. In this article, we will delve into an extensive industry comparison, evaluating Taiwan Semiconductor TSM in comparison to its major competitors within the Semiconductors & Semiconductor Equipment industry. By analyzing critical financial metrics, market position, and growth potential, our objective is to provide valuable insights for investors and offer a deeper understanding of company's performance in 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 | 33.32 | 7.98 | 12.92 | 6.38% | $428.26 | $314.51 | 16.52% |
| NVIDIA Corp | 75.84 | 64.88 | 40.52 | 32.31% | $17.75 | $20.41 | 262.12% |
| Broadcom Inc | 72.32 | 11.17 | 17.70 | 3.02% | $5.58 | $7.78 | 4.4% |
| Advanced Micro Devices Inc | 231.67 | 4.60 | 11.44 | 0.22% | $0.9 | $2.56 | 2.24% |
| Qualcomm Inc | 29.03 | 9.93 | 6.74 | 9.79% | $3.08 | $5.28 | 1.23% |
| Texas Instruments Inc | 30.54 | 10.51 | 10.69 | 6.52% | $1.77 | $2.1 | -16.4% |
| ARM Holdings PLC | 543.45 | 31.19 | 50.92 | 4.35% | $0.06 | $0.89 | 46.6% |
| Intel Corp | 31.38 | 1.22 | 2.33 | -0.36% | $2.09 | $5.22 | 8.61% |
| Analog Devices Inc | 54.67 | 3.29 | 11.19 | 0.85% | $0.93 | $1.18 | -33.83% |
| Microchip Technology Inc | 26.66 | 7.48 | 6.66 | 2.25% | $0.47 | $0.79 | -40.62% |
| STMicroelectronics NV | 11.35 | 2.34 | 2.53 | 3.04% | $1.06 | $1.44 | -18.41% |
| Monolithic Power Systems Inc | 97.34 | 18.81 | 21.82 | 4.45% | $0.1 | $0.25 | 1.51% |
| ON Semiconductor Corp | 15.31 | 3.97 | 4.08 | 5.7% | $0.71 | $0.85 | -4.95% |
| First Solar Inc | 30.56 | 4.52 | 8.79 | 3.48% | $0.36 | $0.35 | 44.83% |
| GLOBALFOUNDRIES Inc | 30.19 | 2.38 | 3.81 | 1.19% | $0.54 | $0.39 | -15.86% |
| ASE Technology Holding Co Ltd | 23.01 | 2.74 | 1.38 | 1.94% | $23.55 | $20.87 | 1.46% |
| United Microelectronics Corp | 13.16 | 1.91 | 3.19 | 2.9% | $24.0 | $16.9 | 0.78% |
| Skyworks Solutions Inc | 20.03 | 2.68 | 3.77 | 2.91% | $0.31 | $0.42 | -9.29% |
| Universal Display Corp | 44.45 | 6.53 | 15.94 | 3.86% | $0.07 | $0.13 | 26.67% |
| Lattice Semiconductor Corp | 39.67 | 12.47 | 12.44 | 2.15% | $0.03 | $0.1 | -23.6% |
| MACOM Technology Solutions Holdings Inc | 117.74 | 7.23 | 11.87 | 1.45% | $0.04 | $0.1 | 6.98% |
| Cirrus Logic Inc | 25.33 | 3.65 | 3.89 | 2.48% | $0.05 | $0.19 | -39.93% |
| Average | 74.46 | 10.17 | 11.99 | 4.5% | $3.97 | $4.2 | 9.74% |
By analyzing Taiwan Semiconductor, we can infer the following trends:
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With a Price to Earnings ratio of 33.32, which is 0.45x less than the industry average, the stock shows potential for growth at a reasonable price, making it an interesting consideration for market participants.
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The current Price to Book ratio of 7.98, which is 0.78x the industry average, is substantially lower than the industry average, indicating potential undervaluation.
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The stock's relatively high Price to Sales ratio of 12.92, surpassing the industry average by 1.08x, may indicate an aspect of overvaluation in terms of sales performance.
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With a Return on Equity (ROE) of 6.38% that is 1.88% above the industry average, it appears that the company exhibits efficient use of equity to generate profits.
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Compared to its industry, the company has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $428.26 Billion, which is 107.87x above the industry average, indicating stronger profitability and robust cash flow generation.
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The company has higher gross profit of $314.51 Billion, which indicates 74.88x above the industry average, indicating stronger profitability and higher earnings from its core operations.
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The company's revenue growth of 16.52% is notably higher compared to the industry average of 9.74%, showcasing exceptional sales performance and strong demand for its products or services.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio indicates the proportion of debt and equity used by a company to finance its assets and operations.
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:
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Compared to its top 4 peers, Taiwan Semiconductor has a stronger financial position indicated by its lower debt-to-equity ratio of 0.28.
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This suggests that the company relies less on debt financing and has a more favorable balance between debt and equity, which can be seen as a positive attribute by investors.
Key Takeaways
For Taiwan Semiconductor, the PE and PB ratios are low compared to 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 industry peers, reflecting strong financial performance and growth prospects.
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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