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 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 | 31.45 | 7.77 | 12.08 | 6.67% | $474.12 | $358.12 | 40.07% |
| NVIDIA Corp | 56.92 | 51.21 | 31.39 | 30.94% | $19.71 | $22.57 | 122.4% |
| Broadcom Inc | 139.49 | 12.29 | 17.10 | -2.77% | $6.39 | $8.36 | 47.27% |
| Advanced Micro Devices Inc | 195.65 | 4.70 | 11.57 | 0.47% | $1.12 | $2.86 | 8.88% |
| Texas Instruments Inc | 36.25 | 11.09 | 11.92 | 6.59% | $1.76 | $2.21 | -15.65% |
| Qualcomm Inc | 21.76 | 7.68 | 5.14 | 8.67% | $2.87 | $5.22 | 11.15% |
| ARM Holdings PLC | 359.83 | 26.94 | 43.63 | 4.07% | $0.23 | $0.91 | 39.11% |
| Micron Technology Inc | 153.57 | 2.64 | 4.79 | 1.99% | $3.63 | $2.74 | 13.79% |
| Analog Devices Inc | 69.89 | 3.27 | 11.94 | 1.11% | $1.04 | $1.31 | -24.84% |
| Intel Corp | 99.62 | 0.89 | 1.85 | -1.46% | $0.86 | $4.55 | -0.9% |
| Monolithic Power Systems Inc | 110.12 | 20.54 | 23.87 | 4.66% | $0.13 | $0.28 | 15.03% |
| Microchip Technology Inc | 32.11 | 6.75 | 6.68 | 1.98% | $0.41 | $0.74 | -45.76% |
| ON Semiconductor Corp | 16.95 | 3.82 | 4.20 | 4.11% | $0.58 | $0.78 | -17.15% |
| First Solar Inc | 22.83 | 3.77 | 7.30 | 4.94% | $0.48 | $0.5 | 24.65% |
| STMicroelectronics NV | 7.99 | 1.54 | 1.86 | 3.51% | $1.31 | $1.15 | -25.29% |
| GLOBALFOUNDRIES Inc | 28.05 | 2.01 | 3.31 | 1.38% | $0.56 | $0.4 | -11.54% |
| ASE Technology Holding Co Ltd | 20.35 | 2.32 | 1.21 | 2.62% | $26.08 | $23.07 | 2.91% |
| United Microelectronics Corp | 13.20 | 1.96 | 3.09 | 3.76% | $27.9 | $19.98 | 0.89% |
| Skyworks Solutions Inc | 20.42 | 2.49 | 3.65 | 1.9% | $0.25 | $0.36 | -15.47% |
| Universal Display Corp | 44.18 | 6.40 | 15.74 | 3.47% | $0.07 | $0.12 | 8.15% |
| MACOM Technology Solutions Holdings Inc | 112.65 | 7.45 | 11.97 | 1.88% | $0.04 | $0.1 | 28.25% |
| Lattice Semiconductor Corp | 39.35 | 10.55 | 11.86 | 3.28% | $0.04 | $0.08 | -34.72% |
| Cirrus Logic Inc | 22.60 | 3.52 | 3.67 | 2.3% | $0.07 | $0.19 | 17.98% |
| Average | 73.81 | 8.81 | 10.81 | 4.06% | $4.34 | $4.48 | 6.78% |
By closely studying Taiwan Semiconductor, we can observe the following trends:
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With a Price to Earnings ratio of 31.45, which is 0.43x 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 7.77, which is 0.88x the industry average, is substantially lower than the industry average, indicating potential undervaluation.
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With a relatively high Price to Sales ratio of 12.08, which is 1.12x the industry average, the stock might be considered overvalued based on sales performance.
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With a Return on Equity (ROE) of 6.67% that is 2.61% 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 $474.12 Billion, which is 109.24x above the industry average, indicating stronger profitability and robust cash flow generation.
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The company has higher gross profit of $358.12 Billion, which indicates 79.94x above the industry average, indicating stronger profitability and higher earnings from its core operations.
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With a revenue growth of 40.07%, which surpasses the industry average of 6.78%, the company is demonstrating robust sales expansion and gaining market share.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio is a measure that indicates the level of debt a company has taken on relative to the value of its assets net of liabilities.
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.
In terms of the Debt-to-Equity ratio, Taiwan Semiconductor stands in comparison with its top 4 peers, leading to the following comparisons:
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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 0.27.
Key Takeaways
For Taiwan Semiconductor, the PE ratio is low compared to peers, indicating potential undervaluation. The PB ratio is also low, suggesting a possible bargain opportunity. However, the PS ratio is high, which may indicate overvaluation based on revenue. In terms of profitability metrics, Taiwan Semiconductor shows high ROE, EBITDA, gross profit, and revenue growth compared to industry peers, reflecting strong financial performance 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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