Comparative Study: Taiwan Semiconductor And Industry Competitors In Semiconductors & Semiconductor Equipment Industry

In today's rapidly changing and highly competitive business world, it is imperative for investors and industry observers to carefully assess companies before making investment choices. In this article, we will undertake a comprehensive industry comparison, evaluating Taiwan Semiconductor TSM vis-à-vis its key competitors in the Semiconductors & Semiconductor Equipment industry. Through a detailed analysis of important financial indicators, market standing, and growth potential, our goal is to provide valuable insights and highlight company's performance in 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 US 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.

By thoroughly analyzing Taiwan Semiconductor, we can discern the following trends:

• With a Price to Earnings ratio of 36.08, which is 0.49x less than the industry average, the stock shows potential for growth at a reasonable price, making it an interesting consideration for market participants.

• With a Price to Book ratio of 8.46, significantly falling below the industry average by 0.93x, it suggests undervaluation and the possibility of untapped growth prospects.

• With a relatively high Price to Sales ratio of 13.85, which is 1.27x the industry average, the stock might be considered overvalued based on sales performance.

• The Return on Equity (ROE) of 8.36% is 4.24% above the industry average, highlighting efficient use of equity to generate profits.

• With higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $360.77 Billion, which is 83.13x above the industry average, the company demonstrates stronger profitability and robust cash flow generation.

• Compared to its industry, the company has higher gross profit of $439.35 Billion, which indicates 98.07x above the industry average, indicating stronger profitability and higher earnings from its core operations.

• With a revenue growth of 38.95%, which surpasses the industry average of 11.49%, the company is demonstrating robust sales expansion and gaining market share.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio assesses the extent to which a company relies on borrowed funds compared to its 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 assessing Taiwan Semiconductor against its top 4 peers using the Debt-to-Equity ratio, the following comparisons can be made:

• 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.

• 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 0.23.

Key Takeaways

For Taiwan Semiconductor, the PE and PB ratios suggest the stock is undervalued compared to peers, indicating potential for growth. However, the high PS ratio may indicate overvaluation based on revenue. In terms of profitability, the high ROE, EBITDA, gross profit, and revenue growth indicate strong performance and potential for further expansion within the industry.

This article was generated by Benzinga's automated content engine and reviewed by an editor.