File photo of a 12-inch wafer is at Taiwan Semiconductor Manufacturing Company (TSMC) in Xinchu, TaiwanReuters
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Taiwan Semiconductor Manufacturing Co. Ltd. (TSM-N) designs, produces, and sells integrated circuits and other semiconductor devices. It also offers a range of wafer fabrication processes, including processes to manufacture CMOS (complementary metal oxide silicon) logic, mixed-signal, radio frequency (RF), embedded memory, BiCMOS (bipolar complementary metal oxide silicon) mixed-signal and other semiconductors.
The Warren Buffett-based strategy likes that it has upped its EPS in all but two years of the past decade. That model also likes that it has a 10-year average return on equity of 21.2 per cent.
It trades for a reasonable 14x trailing 12-month EPS.
TSM has a 3.4 current ratio, a sign of good liquidity, according to the Benjamin Graham-based approach. Its debt/equity ratio (19.5 per cent) is well below the industry average (39.7 per cent), which the Martin Zweig-based model likes. That model also likes that EPS growth is accelerating (322 per cent last quarter.)
The company has a stellar 35-per-cent trailing 12-month profit margin, against an industry average of just two per cent.
Taiwan Semiconductor has a 10-year average return on equity of 21.2 per cent, which the Buffett model likes.
The company has grown EPS at a 20-per-cent clip over the long term (using an average of the three-, four- and five-year EPS growth rates) and revenues at a 17-per-cent pace (using an average of three-, four- and five-year sales growth rates.)
The Peter Lynch model likes its 0.59 P/E-to-growth ratio.
The company has a stellar return on retained earnings (those not paid out as dividends or used for capital expenditures) of more than 60% over the past decade.
The stock offers a 3-per-cent dividend yield.
John Reese is long TSM.
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