Taiwan Semiconductor Manufacturing Co Ltd (TSM, Financial), a titan in the semiconductor industry, has recently experienced a notable uptick in its stock performance. With a current market capitalization of $577.04 billion and a stock price of $111.26, TSM has seen a 2.13% gain over the past week and an impressive 13.67% gain over the past three months. According to GF Value, the stock is currently fairly valued at $119.51, a slight decrease from the past GF Value of $133.66, which indicated the stock was significantly undervalued. This shift in valuation reflects the stock's recent price changes and suggests a stabilization in its market perception.
Introduction to Taiwan Semiconductor Manufacturing Co Ltd
Taiwan Semiconductor Manufacturing Co Ltd (TSM, Financial), the world's largest dedicated independent semiconductor foundry, commands nearly 60% of the market share. Established in 1987, TSMC has grown to become a pivotal player in the semiconductor space, going public in the U.S. as an ADR in 1997. The company's substantial scale and advanced technology have enabled it to maintain robust operating margins. TSMC's success is further bolstered by the industry's shift towards a fabless business model, which has generated significant tailwinds. With a prestigious customer base that includes industry giants like Apple, AMD, and Nvidia, TSMC continues to lead in applying state-of-the-art process technologies to semiconductor designs. The company's workforce exceeds 73,000 employees, reflecting its expansive operations.
Unmatched Profitability in the Semiconductor Industry
When it comes to profitability, TSM is a standout with a Profitability Rank of 10/10, indicating a top-tier performance within the industry. The company's operating margin stands at an impressive 45.63%, surpassing 98.13% of 964 companies in the semiconductors industry. TSM's return on equity (ROE) is equally remarkable at 28.58%, higher than 92.81% of its peers. Additionally, the return on assets (ROA) and return on invested capital (ROIC) are 17.24% and 26.63% respectively, both exceeding the performance of over 90% of competitors. TSM's consistent profitability over the past decade further solidifies its financial strength and industry dominance.
Robust Growth Trajectory
The company's growth metrics are equally impressive, with a Growth Rank of 10/10. TSM has achieved a 28.40% 3-year revenue growth rate per share, outperforming 81.28% of 876 companies in the industry. Over a 5-year period, the revenue growth rate per share is 17.80%, higher than 77.76% of its peers. Looking ahead, the estimated total revenue growth rate for the next 3 to 5 years is projected at 14.07%, which is better than 77.14% of the industry. The 3-year EPS without NRI growth rate stands at a robust 40.90%, and the 5-year rate at 22.40%, both indicating strong earnings potential. The future EPS growth rate estimate for the next 3 to 5 years is 4.94%, showcasing TSM's sustained growth prospects.
Influential Shareholders in TSM
Notable investors have taken significant positions in TSM, demonstrating confidence in the company's future. Ken Fisher (Trades, Portfolio) is the leading shareholder with 30,637,393 shares, representing 0.59% of the company. First Eagle Investment (Trades, Portfolio) holds 8,980,263 shares, accounting for 0.17%, while Steve Mandel (Trades, Portfolio) owns 7,800,152 shares, equating to 0.15%. These investments by prominent figures in the financial world underscore the attractiveness of TSM as a long-term investment.
Competitive Landscape
Within the semiconductor industry, TSM faces competition from several key players. MediaTek Inc (TPE:2454, Financial) with a market cap of $44.38 billion, United Microelectronics Corp (TPE:2303, Financial) valued at $19.27 billion, and ASE Technology Holding Co Ltd (TPE:3711, Financial) with a market cap of $17.08 billion are among the closest in terms of market capitalization. Despite the competition, TSM's market cap dwarfs that of its competitors, highlighting its dominant position in the market.
Conclusion: TSM's Strong Market Position and Future Outlook
In summary, Taiwan Semiconductor Manufacturing Co Ltd's recent stock performance and current valuation reflect a company that is both thriving in the present and poised for future success. The company's exceptional profitability and growth metrics, combined with its leadership in the semiconductor industry, make it a compelling choice for investors. The confidence shown by major shareholders further cements TSM's status as a heavyweight in the technology sector. As the company continues to innovate and expand its market share, it remains a significant player to watch in the dynamic world of semiconductors.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
