It hasn't been a great morning session for Taiwan Semiconductor Manufacturing Company investors, who have watched their shares sink by -3.7% to a price of $88.82. Some of you might be wondering if it's time to buy the dip. If you are considering this, make sure to check the company's fundamentals first to determine if the shares are fairly valued at today's prices.
The Market May Be Undervaluing Taiwan Semiconductor Manufacturing Company's Assets and Equity:
Taiwan Semiconductor Manufacturing Company Limited, together with its subsidiaries, manufactures, packages, tests, and sells integrated circuits and other semiconductor devices in Taiwan, China, Europe, the Middle East, Africa, Japan, the United States, and internationally. It provides complementary metal oxide silicon wafer fabrication processes to manufacture logic, mixed-signal, radio frequency, and embedded memory semiconductors. The company belongs to the Technology sector, which has an average price to earnings (P/E) ratio of 27.16 and an average price to book (P/B) ratio of 6.23. In contrast, Taiwan Semiconductor Manufacturing Company has a trailing 12 month P/E ratio of 15.6 and a P/B ratio of 1.16.
Taiwan Semiconductor Manufacturing Company's PEG ratio is 3.15, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.
The Company Has a Positive Net Current Asset Value:
| 2021-04-14 | 2022-04-14 | |
|---|---|---|
| Revenue (MM) | $1,339,255 | $1,587,415 |
| Gross Margins | 53.0% | 52.0% |
| Operating Margins | 42% | 41% |
| Net Margins | 38.0% | 37.0% |
| Net Income (MM) | $511,008 | $592,881 |
| Net Interest Expense (MM) | $9,018 | $5,709 |
| Depreciation & Amort. (MM) | -$331,725 | -$422,395 |
| Earnings Per Share | $98.53 | $114.32 |
| EPS Growth | n/a | 16.03% |
| Diluted Shares (MM) | 5,186 | 5,186 |
| Free Cash Flow (MM) | $1,337,796 | $1,959,185 |
| Capital Expenditures (MM) | -$515,130 | -$847,025 |
| Net Current Assets (MM) | $167,349 | $33,453 |
| Long Term Debt (MM) | $256,073 | $613,380 |
| Net Debt / EBITDA | -0.5 | -0.43 |
Taiwan Semiconductor Manufacturing Company has strong margins with a stable trend, an excellent current ratio, and low leverage. However, the firm suffers from slimmer gross margins than its peers and declining EPS growth. Finally, we note that Taiwan Semiconductor Manufacturing Company has weak revenue growth and a flat capital expenditure trend and irregular cash flows.
