Taiwan Semiconductor Manufacturing Company Limited
Taiwan Semiconductor Manufacturing Company Limited Fundamental Analysis
Taiwan Semiconductor Manufacturing Company Limited (TSM) shows strong financial fundamentals with a PE ratio of 34.86, profit margin of 45.11%, and ROE of 35.25%. The company generates $3818.6B in annual revenue with strong year-over-year growth of 33.89%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 98.2/100 based on profitability, valuation, growth, and balance sheet metrics. The A grade reflects excellent fundamentals and strong overall stability.
Fundamental Health Score
We analyze TSM's fundamental strength across five key dimensions:
Efficiency Score
ExcellentTSM demonstrates superior asset utilization.
Valuation Score
ModerateTSM shows balanced valuation metrics.
Growth Score
ExcellentTSM delivers strong and consistent growth momentum.
Financial Health Score
ExcellentTSM maintains a strong and stable balance sheet.
Profitability Score
ExcellentTSM achieves industry-leading margins.
Key Financial Metrics
Is TSM Expensive or Cheap?
P/E Ratio
TSM trades at 34.86 times earnings. This suggests a premium valuation.
PEG Ratio
When adjusting for growth, TSM's PEG of 0.12 indicates potential undervaluation.
Price to Book
The market values Taiwan Semiconductor Manufacturing Company Limited at 11.11 times its book value. This suggests the stock is fully valued or overvalued on an asset basis.
EV/EBITDA
Enterprise value stands at 21.35 times EBITDA. This signals the market has high growth expectations.
How Well Does TSM Make Money?
Net Profit Margin
For every $100 in sales, Taiwan Semiconductor Manufacturing Company Limited keeps $45.11 as profit after all expenses.
Operating Margin
Core operations generate 50.81 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $35.25 in profit for every $100 of shareholder equity.
ROA
Taiwan Semiconductor Manufacturing Company Limited generates $21.78 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
Taiwan Semiconductor Manufacturing Company Limited generates strong operating cash flow of $2.29T, reflecting robust business health.
Free Cash Flow
Taiwan Semiconductor Manufacturing Company Limited generates strong free cash flow of $1.02T, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $196.61 in free cash annually.
FCF Yield
TSM converts 1.69% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
34.86
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
0.12
vs 25 benchmark
P/B Ratio
Price to book value ratio
11.11
vs 25 benchmark
P/S Ratio
Price to sales ratio
15.72
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
0.18
vs 25 benchmark
Current Ratio
Current assets to current liabilities
2.62
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.35
vs 25 benchmark
ROA
Return on assets percentage
0.22
vs 25 benchmark
ROCE
Return on capital employed
0.30
vs 25 benchmark
How TSM Stacks Against Its Sector Peers
| Metric | TSM Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 34.86 | 34.79 | Neutral |
| ROE | 35.25% | 1185.00% | Weak |
| Net Margin | 45.11% | -133093.00% (disorted) | Strong |
| Debt/Equity | 0.18 | 0.43 | Strong (Low Leverage) |
| Current Ratio | 2.62 | 4.90 | Strong Liquidity |
| ROA | 21.78% | -324805.00% (disorted) | Strong |
TSM outperforms its industry in 4 out of 6 key metrics, particularly excelling in Net Margin, but lagging in ROE.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews Taiwan Semiconductor Manufacturing Company Limited's 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
170.50%
Industry Style: Growth, Innovation, High Beta
High GrowthEPS CAGR
227.28%
Industry Style: Growth, Innovation, High Beta
High GrowthFCF CAGR
196.88%
Industry Style: Growth, Innovation, High Beta
High Growth