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 over 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 | 29.71 | 7.34 | 11.41 | 6.67% | $474.12 | $358.12 | 40.07% |
| NVIDIA Corp | 55.13 | 49.60 | 30.40 | 30.94% | $19.71 | $22.57 | 122.4% |
| Broadcom Inc | 67.61 | 10.44 | 16.55 | 3.02% | $5.58 | $7.78 | 42.99% |
| Advanced Micro Devices Inc | 173.20 | 4.16 | 10.24 | 0.47% | $1.12 | $2.86 | 8.88% |
| Texas Instruments Inc | 36.58 | 11.20 | 12.03 | 6.59% | $1.76 | $2.21 | -15.65% |
| Qualcomm Inc | 21.67 | 7.65 | 5.12 | 8.67% | $2.87 | $5.22 | 11.15% |
| ARM Holdings PLC | 326.09 | 24.42 | 39.54 | 4.07% | $0.23 | $0.91 | 39.11% |
| Analog Devices Inc | 69.55 | 3.26 | 11.88 | 1.11% | $1.04 | $1.31 | -24.84% |
| Intel Corp | 83.88 | 0.75 | 1.55 | -1.46% | $0.86 | $4.55 | -0.9% |
| Monolithic Power Systems Inc | 110.79 | 20.66 | 24.02 | 4.66% | $0.13 | $0.28 | 15.03% |
| Microchip Technology Inc | 32.26 | 6.78 | 6.71 | 1.98% | $0.41 | $0.74 | -45.76% |
| ON Semiconductor Corp | 17.38 | 3.92 | 4.31 | 4.11% | $0.58 | $0.78 | -17.15% |
| STMicroelectronics NV | 8.20 | 1.58 | 1.91 | 3.51% | $1.31 | $1.15 | -25.29% |
| GLOBALFOUNDRIES Inc | 31.52 | 2.26 | 3.72 | 1.38% | $0.56 | $0.4 | -11.54% |
| First Solar Inc | 19.92 | 3.29 | 6.37 | 4.94% | $0.48 | $0.5 | 24.65% |
| United Microelectronics Corp | 13.02 | 1.93 | 3.04 | 3.76% | $27.9 | $19.98 | 0.89% |
| ASE Technology Holding Co Ltd | 19.53 | 2.23 | 1.16 | 2.62% | $26.08 | $23.07 | 2.91% |
| Skyworks Solutions Inc | 22.25 | 2.71 | 3.97 | 1.9% | $0.25 | $0.36 | -15.47% |
| Universal Display Corp | 40.95 | 5.93 | 14.59 | 3.47% | $0.07 | $0.12 | 8.15% |
| MACOM Technology Solutions Holdings Inc | 110.43 | 7.30 | 11.73 | 1.88% | $0.04 | $0.1 | 28.25% |
| Cirrus Logic Inc | 26.83 | 4.17 | 4.36 | 2.3% | $0.07 | $0.19 | 17.98% |
| Lattice Semiconductor Corp | 34.60 | 9.28 | 10.42 | 3.28% | $0.04 | $0.08 | -34.72% |
| Average | 62.92 | 8.74 | 10.65 | 4.44% | $4.34 | $4.53 | 6.24% |
When analyzing Taiwan Semiconductor, the following trends become evident:
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A Price to Earnings ratio of 29.71 significantly below the industry average by 0.47x suggests undervaluation. This can make the stock appealing for those seeking growth.
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With a Price to Book ratio of 7.34, significantly falling below the industry average by 0.84x, it suggests undervaluation and the possibility of untapped growth prospects.
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The Price to Sales ratio of 11.41, which is 1.07x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.
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With a Return on Equity (ROE) of 6.67% that is 2.23% above the industry average, it appears that the company exhibits efficient use of equity to generate profits.
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The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $474.12 Billion is 109.24x 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 $358.12 Billion, which indicates 79.06x above the industry average, indicating stronger profitability and higher earnings from its core operations.
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The company's revenue growth of 40.07% is notably higher compared to the industry average of 6.24%, showcasing exceptional sales performance and strong demand for its products or services.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio provides insights into the proportion of debt a company has in relation to its equity and asset value.
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 comparing Taiwan Semiconductor with its top 4 peers based on the Debt-to-Equity ratio, the following insights can be observed:
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Taiwan Semiconductor demonstrates a stronger financial position compared to its top 4 peers in the sector.
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With a lower debt-to-equity ratio of 0.27, the company relies less on debt financing and maintains a healthier balance between debt and equity, which can be viewed positively by investors.
Key Takeaways
For Taiwan Semiconductor, the PE ratio is low compared to peers, indicating potential undervaluation. The PB ratio is also low, suggesting a favorable price relative to book value. However, the PS ratio is high, signaling rich valuation based on sales. In terms of profitability metrics, the high ROE, EBITDA, gross profit, and revenue growth reflect strong performance within the industry sector.
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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