It's been a great morning session for Taiwan Semiconductor Manufacturing investors, who saw their shares rise 2.8% to a price of $203.44 per share. At these higher prices, is the company still fairly valued? If you are thinking about investing, make sure to check the company's fundamentals before making a decision.
a Lower P/B Ratio Than Its Sector Average but Trading Above Its Fair Price:
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. The company belongs to the Technology sector, which has an average price to earnings (P/E) ratio of 30.01 and an average price to book (P/B) ratio of 3.91. In contrast, Taiwan Semiconductor Manufacturing has a trailing 12 month P/E ratio of 36.1 and a P/B ratio of 1.32.
Taiwan Semiconductor Manufacturing's PEG ratio is 1.45, 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.
Wider Gross Margins Than the Industry Average of 41.19%:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $33,697 | $35,774 | $47,694 | $57,225 | $73,670 | $70,599 |
| Gross Margins | 48% | 46% | 53% | 52% | 60% | 54% |
| Net Margins | 35% | 33% | 38% | 37% | 44% | 39% |
| Net Income (M) | $11,862 | $11,836 | $18,198 | $21,373 | $32,323 | $27,793 |
| Diluted Shares (M) | 25,930 | 25,930 | 25,930 | 25,930 | 25,930 | 25,932 |
| Earnings Per Share | $2.3 | $2.3 | $3.5 | $4.1 | $6.25 | $5.35 |
| EPS Growth | n/a | 0.0% | 52.17% | 17.14% | 52.44% | -14.4% |
| Avg. Price | $35.44 | $39.74 | $65.8 | $114.13 | $100.83 | $203.44 |
| P/E Ratio | 15.41 | 17.28 | 18.8 | 27.84 | 16.13 | 38.03 |
| Free Cash Flow (M) | $18,751 | $20,566 | $29,297 | $40,092 | $52,411 | $40,561 |
| Current Ratio | 2.67 | 1.37 | 1.73 | 2.12 | 2.08 | 2.33 |
Taiwan Semiconductor Manufacturing has generally positive cash flows and an excellent current ratio of 2.33. Additionally, the company's financial statements display wider gross margins than its peer group and a strong EPS growth trend.
