Taiwan Semiconductor Manufacturing Co Ltd (NYSE: TSM)

Sector: Technology Industry: Semiconductors CIK: 0001046179
Market Cap 1,648.98 Bn
P/B 10.06
P/E 31.97
P/S 13.84
ROIC (Qtr) 806.56
Div Yield % 1.17
Rev 1y % (Qtr) 35.05
Total Debt (Qtr) 31.18 Bn
Debt/Equity (Qtr) 0.19

About

Taiwan Semiconductor Manufacturing Co., Ltd., also known as TSMC, is a prominent player in the global semiconductor industry. As a Taiwanese multinational company, TSMC specializes in designing, manufacturing, and testing integrated circuits (ICs). The company's primary business activities revolve around providing IC design and manufacturing services to a diverse range of customers, which include some of the world's leading technology companies. TSMC's ticker symbol is TSM. TSMC operates in the semiconductor industry, providing a variety of services...

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Price action

Investment thesis

Bull case

  • Strong operating cash flow of 71.18B provides robust 2.28x coverage of total debt 31.18B, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 81.06B provide 2085.69x coverage of short-term debt 38.87M, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 71.18B provides exceptional 5211.74x coverage of minority interest expenses 13.66M, showing strong core operations.
  • Operating cash flow of 71.18B provides exceptional 183.09x coverage of interest expenses 388.78M, showing strong debt service capability.
  • Operating cash flow of 71.18B provides strong 1373.20x coverage of stock compensation 51.84M, indicating sustainable incentive practices.

Bear case

  • Operating cash flow of 71.18B barely covers its investment activities of (35.77B), with a coverage ratio of -1.99, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 71.18B provides thin coverage of dividend payments of (14.46B) with a -4.92 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Investment activities of (35.77B) provide weak support for R&D spending of 7.83B, which is -4.57x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Operating earnings of 62.74B show weak coverage of depreciation charges of 22.85B, with a 2.75 ratio indicating high capital intensity and potential reinvestment needs.
  • R&D spending of 7.83B represents just 0.19x of capital expenditure 41.89B, indicating potential underinvestment in innovation relative to physical assets.

Peer comparison

Companies in the Semiconductors
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 NVDA Nvidia Corp 4,521.08 Bn 45.58 24.16 10.48 Bn
2 TSM Taiwan Semiconductor Manufacturing Co Ltd 1,648.98 Bn 31.97 13.84 31.18 Bn
3 AVGO Broadcom Inc. 1,565.97 Bn 67.71 24.51 65.14 Bn
4 MU Micron Technology Inc 366.37 Bn 30.76 8.66 12.43 Bn
5 AMD Advanced Micro Devices Inc 333.34 Bn 100.83 10.41 3.87 Bn
6 INTC Intel Corp 271.33 Bn 1,370.33 5.08 46.55 Bn
7 QCOM Qualcomm Inc/De 199.55 Bn 36.01 4.51 14.81 Bn
8 TXN Texas Instruments Inc 172.17 Bn 34.14 9.97 14.05 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.02 4.13
EV to Cash from Ops. EV/CFO 3.46 -370.81
EV to Debt EV to Debt 7.90 88.27
EV to EBIT EV/EBIT 3.93 -65.23
EV to EBITDA EV/EBITDA 3.01 22.97
EV to Free Cash Flow [EV/FCF] EV/FCF 8.41 -8.14
EV to Market Cap EV to Market Cap 0.15 0.80
EV to Revenue EV/Rev 2.07 20.31
Price to Book Value [P/B] P/B 10.06 5.16
Price to Earnings [P/E] P/E 31.97 9.20
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.12 2.39
Dividend Payout Ratio % Div Payout % (Qtr) 29.20 8.25
Dividend per Basic Share Div per Share (Qtr) 2.90 0.63
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 1.69 9.91
Interest Coverage Int. cover (Qtr) 161.38 8.38
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -73.37 -155.98
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 35.72 45.60
Dividend Growth (1y) % Div 1y % (Qtr) 31.68 5.64
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 54.68 26.23
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 43.59 47.12
EBIT Growth (1y) % EBIT 1y % (Qtr) 58.89 25.83
EBT Growth (1y) % EBT 1y % (Qtr) 59.30 39.93
EPS Growth (1y) % EPS 1y % (Qtr) 55.04 24.64
FCF Growth (1y) % FCF 1y % (Qtr) 10.49 244.42
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 53.74 43.10
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.02 0.49
Cash Payout Ratio Cash Payout (Qtr) 0.13 0.09
Cash Ratio Cash Ratio (Qtr) 1.94 2.23
Current Ratio Curr Ratio (Qtr) 2.69 5.43
Debt to Equity Ratio Debt/Equity (Qtr) 0.19 0.34
Interest Cover Ratio Int Coverage (Qtr) 161.38 8.38
Times Interest Earned Times Interest Earned (Qtr) 161.38 8.38
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 71.80 -112.38
EBIT Margin % EBIT Margin % (Qtr) 1,605.10 -91.98
EBT Margin % EBT Margin % (Qtr) 52.33 -132.25
Gross Margin % Gross Margin % (Qtr) 59.00 47.73
Net Profit Margin % Net Margin % (Qtr) 43.30 -133.26