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Taiwan Semiconductor Manufacturing Co Ltd ADR TSM

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Stock XNYS Rating as of
$186.63 +2.64 (1.43%)
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As of Delayed Price Pre-Open: $187.89 +1.25
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Company Report

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TSMC: Raising Valuation by 45% on Potential Price Hike, and Incremental AI PC and Datacenter Demand

Phelix Lee

We raise our fair value estimate on Taiwan Semiconductor Manufacturing, or TSMC, to TWD 1,380 per share from TWD 950 (USD 213 per ADR from USD 146) owing to higher pricing expectations, stronger artificial intelligence demand, and plausible upward revision in its full-year revenue guidance. As a result, we increase our revenue and EPS expectations for 2024 to 2028 by up to 9% and 17%, respectively. In addition, we lowered our WACC to 8.2% from 9.3% as TSMC is closer to opening overseas plants to mitigate geopolitical risks in East Asia. Even after a 60% year-to-date share price rally, we view TSMC is undervalued as potential price hikes without much additional capital expenditure would disproportionately improve free cash flow.

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Price vs Fair Value

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TSM is trading at a 568% premium.
Price
$186.63
Fair Value
$427.00
Uncertainty
Medium
1-Star Price
$392.91
5-Star Price
$865.50
Economic Moat
Dxs
Capital Allocation
Ztvmrcgfvr

Bulls Say, Bears Say

Bulls

TSMC should consistently earn higher gross margins than competitors thanks to its economies of scale and premium pricing justified by cutting-edge process technologies.

Bears

Although TSMC is the foundry leader, each generation of process technology matures and commoditizes quickly, forcing the company to deal with pricing pressure.

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Trading Information

Previous Close Price
$183.99
Day Range
$185.13–192.80
52-Week Range
$84.02–192.80
Bid/Ask
$187.75 / $187.95
Market Cap
$967.88 Bil
Volume/Avg
178,687 / 14.7 Mil

Key Statistics

Price/Earnings (Normalized)
36.14
Price/Sales
13.53
Dividend Yield (Trailing)
1.09%
Dividend Yield (Forward)
1.32%
Total Yield
1.09%

Company Profile

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.
Sector
Technology
Industry
Semiconductors
Stock Style Box
Large Growth
Total Number of Employees
76,478
Website
https://www.tsmc.com

Competitors

Valuation

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Metric
TSM
INTC
GFS
Price/Earnings (Normalized)
 36.1426.9826.35
Price/Book Value
 8.531.372.64
Price/Sales
 13.532.614.19
Price/Cash Flow
 22.498.3411.61
Price/Earnings
No chart available

Financial Strength

Metric
TSM
INTC
GFS
Quick Ratio
 2.100.911.59
Current Ratio
 2.391.572.18
Interest Coverage
 80.730.87—
Quick Ratio
No chart available

Profitability

Metric
TSM
INTC
GFS
Return on Assets (Normalized)
 16.16%2.83%5.33%
Return on Equity (Normalized)
 26.16%5.22%8.90%
Return on Invested Capital (Normalized)
 19.14%3.23%6.62%
Return on Assets
No chart available
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Semiconductors Industry Comparables

Screen With Investor
1-Day Chart
Name
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Morningstar Rating for Stocks
Capital Allocation
Economic Moat
Market Cap
NVIDIA Corp
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 Qualcomm Inc
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SthyrvzyqSsfcr$232.0 Bil
 ARM Holdings PLC ADR
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KknblvjhcLvnv$193.5 Bil
 Texas Instruments Inc
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ZqpyrqwychXqxj$183.4 Bil
 Micron Technology Inc
MU
BsphbzncBdsv$144.9 Bil
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INTC
JpfsxphpYwlz$144.7 Bil
 Analog Devices Inc
ADI
LytbrlvkzvKqyv$115.8 Bil

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