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In the ever-evolving and intensely competitive business landscape, conducting a thorough company analysis is of utmost importance for investors and industry followers. In this article, we will carry out an in-depth industry comparison, assessing Taiwan Semiconductor (NYSE:TSM) alongside its primary competitors in the Semiconductors & Semiconductor Equipment industry. By meticulously examining key financial metrics, market positioning, and growth prospects, we aim to offer valuable insights to investors and shed light on company's performance within the industry.
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 | 30.70 | 7.58 | 11.79 | 6.67% | $474.12 | $358.12 | 40.07% |
| NVIDIA Corp | 55.84 | 50.24 | 30.79 | 30.94% | $19.71 | $22.57 | 122.4% |
| Broadcom Inc | 135.45 | 11.93 | 16.61 | -2.77% | $6.39 | $8.36 | 47.27% |
| Advanced Micro Devices Inc | 181.32 | 4.36 | 10.72 | 0.47% | $1.12 | $2.86 | 8.88% |
| Qualcomm Inc | 21.45 | 7.57 | 5.07 | 8.67% | $2.87 | $5.22 | 11.15% |
| Texas Instruments Inc | 34.65 | 10.60 | 11.39 | 6.59% | $1.76 | $2.21 | -15.65% |
| ARM Holdings PLC | 364.25 | 27.27 | 44.16 | 4.07% | $0.23 | $0.91 | 39.11% |
| Analog Devices Inc | 67.90 | 3.18 | 11.60 | 1.11% | $1.04 | $1.31 | -24.84% |
| Intel Corp | 81.92 | 0.73 | 1.52 | -1.46% | $0.86 | $4.55 | -0.9% |
| Monolithic Power Systems Inc | 108.82 | 20.29 | 23.59 | 4.66% | $0.13 | $0.28 | 15.03% |
| Microchip Technology Inc | 30.92 | 6.50 | 6.43 | 1.98% | $0.41 | $0.74 | -45.76% |
| ON Semiconductor Corp | 16.34 | 3.68 | 4.05 | 4.11% | $0.58 | $0.78 | -17.15% |
| STMicroelectronics NV | 7.52 | 1.45 | 1.75 | 3.51% | $1.31 | $1.15 | -25.29% |
| First Solar Inc | 20.43 | 3.38 | 6.53 | 4.94% | $0.48 | $0.5 | 24.65% |
| GLOBALFOUNDRIES Inc | 27.23 | 1.95 | 3.21 | 1.38% | $0.56 | $0.4 | -11.54% |
| United Microelectronics Corp | 13.05 | 1.94 | 3.05 | 3.76% | $27.9 | $19.98 | 0.89% |
| ASE Technology Holding Co Ltd | 19.43 | 2.22 | 1.15 | 2.62% | $26.08 | $23.07 | 2.91% |
| Skyworks Solutions Inc | 21.17 | 2.58 | 3.78 | 1.9% | $0.25 | $0.36 | -15.47% |
| Universal Display Corp | 44.88 | 6.50 | 15.99 | 3.47% | $0.07 | $0.12 | 8.15% |
| MACOM Technology Solutions Holdings Inc | 102.47 | 6.77 | 10.89 | 1.88% | $0.04 | $0.1 | 28.25% |
| Cirrus Logic Inc | 24.75 | 3.85 | 4.02 | 2.3% | $0.07 | $0.19 | 17.98% |
| Lattice Semiconductor Corp | 32.93 | 8.83 | 9.92 | 3.28% | $0.04 | $0.08 | -34.72% |
| Average | 67.27 | 8.85 | 10.77 | 4.16% | $4.38 | $4.56 | 6.45% |
After a detailed analysis of Taiwan Semiconductor, the following trends become apparent:
The stock's Price to Earnings ratio of 30.7 is lower than the industry average by 0.46x, suggesting potential value in the eyes of market participants.
Considering a Price to Book ratio of 7.58, which is well below the industry average by 0.86x, the stock may be undervalued based on its book value compared to its peers.
The Price to Sales ratio of 11.79, which is 1.09x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.
With a Return on Equity (ROE) of 6.67% that is 2.51% above the industry average, it appears that the company exhibits efficient use of equity to generate profits.
The company has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $474.12 Billion, which is 108.25x above the industry average, indicating stronger profitability and robust cash flow generation.
With higher gross profit of $358.12 Billion, which indicates 78.54x above the industry average, the company demonstrates stronger profitability and higher earnings from its core operations.
The company is experiencing remarkable revenue growth, with a rate of 40.07%, outperforming the industry average of 6.45%.
The debt-to-equity (D/E) ratio measures the financial leverage of a company by evaluating its debt relative 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.
In light of the Debt-to-Equity ratio, a comparison between Taiwan Semiconductor and its top 4 peers reveals the following information:
Among its top 4 peers, Taiwan Semiconductor has a stronger financial position with a lower debt-to-equity ratio of 0.27.
This indicates that the company relies less on debt financing and maintains a more favorable balance between debt and equity, which can be viewed positively by investors.
For Taiwan Semiconductor, the PE and PB ratios are low compared to peers, indicating potential undervaluation. However, the high PS ratio suggests rich valuation based on revenue. In terms of ROE, EBITDA, gross profit, and revenue growth, Taiwan Semiconductor outperforms peers, reflecting strong financial performance and growth prospects in the semiconductor industry.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
Posted In: TSM
