TSMC Stock: Buy, Hold, or Wait – Dataconomy
Taiwan Semiconductor Manufacturing Company, also known as TSMC, observed a slight decrease of 0.5% in its stock price during Wednesday’s trading session closing at $206.33. The stock hit a low of $204.55 earlier that day, with trading volume dropping by 49% to 7.63 million shares, lower than the average volume of 15.09 million shares. However, the company had previously closed at $207.36.
Analysts’ opinions on TSMC’s stock performance are varied. While Needham & Company maintained a “buy” rating with a price target of $210.00 on October 17, StockNews.com downgraded the stock from “buy” to “hold” on November 17. Barclays upgraded their price target from $215.00 to $240.00, keeping an “overweight” rating on November 18. In total, there are two hold ratings and four buy ratings on the stock. TSMC currently boasts an average rating of “Moderate Buy,” with an average target price of $214.00.
With a market capitalization of $1.07 trillion, a P/E ratio of 33.07, and a price-to-earnings-growth (PEG) ratio of 0.93, TSMC is trading at an average price of $194.84 over fifty days and $180.42 over two hundred days. In terms of liquidity, TSMC has a debt-to-equity ratio of 0.24, a quick ratio of 2.30, and a current ratio of 2.57.
In its recent earnings report dated October 17, TSMC indicated a robust financial performance, surpassing analyst expectations by posting an EPS of $1.94 for the quarter, higher than the estimated $1.74 by $0.20. The quarterly revenue stood at $23.50 billion, exceeding estimates of $22.72 billion. With a return on equity of 27.44% and a net margin of 39.10%, analysts predict TSMC will achieve an EPS of 6.95 for the current fiscal year.
Moreover, TSMC announced an increase in its quarterly dividend, which will be paid out on April 10. The new dividend of $0.5484 per share implies an annualized dividend of $2.19, yielding 1.06%. This dividend amount is up from the previous payout of $0.49. The ex-dividend date is set for March 18, with TSMC maintaining a dividend payout ratio (DPR) of 35.10%.
Taking a look at institutional trading activities, it is noted that several large investors have made changes in their TSMC holdings. Reston Wealth Management LLC and Valley Wealth Managers Inc. both acquired new stakes in TSMC, while Fairscale Capital LLC and Sugarloaf Wealth Management LLC increased their holdings. Archer Investment Corp. also upped its stake in the company. Overall, hedge funds and institutional investors currently own 16.51% of TSMC’s stock.
As we navigate discussions around TSMC’s valuation relative to its growth prospects, it’s essential to note that the semiconductor company is experiencing heightened demand driven by the AI sector and recovery in related markets. TSMC has invested significantly in capital expenditures in recent quarters, outspending major industry players like Apple, Tesla, and Nvidia combined. Given TSMC’s stock maintains a high price-to-sales ratio compared to industry averages, conversations surrounding its valuation are likely to persist.
Remember, the content of this article is purely for informational purposes and should not be considered as investment advice. No specific investment strategies are endorsed, nor are any recommendations made regarding the buying or selling of securities.
