Taiwan Semiconductor Manufacturing Company Limited (TSM)
Valuation Overview•Is Taiwan Semiconductor Manufacturing Company Limited Overvalued or Undervalued?
Trading at a relative discount to industry peers, suggesting a specific risk premium is applied.
High-quality fundamentals with a strong composite quality score of 95/100, backed by robust profitability and solvency.
Analysts remain bullish, forecasting further upside expansion with consensus targets suggesting solid gains.
Verdict: Elite compounder with fortress-level fundamentals across every core pillar.
Wall Street is broadly bullish, projecting solid upside alongside robust expected earnings growth. However, capital return yields remain modest, anchored by a strong, well-covered dividend yield.
TSM exhibits elite business quality, driven by exceptional capital efficiency and highly lucrative margins (highlighted by a massive 42.7% ROIC). This is backed by a fortress balance sheet, holding significant net cash ($1.8T) and minimal debt risk.
The company is driving exceptional top-line expansion (19.3% 3Y CAGR) paired with highly explosive earnings growth (20.5% EPS 3Y CAGR). This growth is supported by elite operational efficiency, sustaining an impressive 50.8% operating margin.
| Financial Metric | Trend (12Q) | Latest Qtr | 1Y Growth | 3Y CAGR | 5Y CAGR | 10Y CAGR |
|---|---|---|---|---|---|---|
| Revenue | $1.1T | +33.0% | +19.3% | +23.5% | +16.4% | |
| EBITDA | $732.8B | — | +19.4% | — | — | |
| Net Income | $510.5B | +49.8% | +20.5% | — | +19.1% | |
| EPS (Diluted) | $98.45 | +49.8% | +20.5% | +27.7% | +19.1% | |
| Free Cash Flow | $388.2B | +26.1% | +28.2% | +29.5% | — |
| Metric | TTM | 3Y Avg | 5Y Avg | 10Y Avg |
|---|---|---|---|---|
| Gross Margin | 59.9% | 56.8% | 56.3% | 53.0% |
| Operating Margin | 50.8% | 46.4% | 45.9% | 42.3% |
| Net Margin | 45.1% | 41.5% | 41.1% | 38.2% |
| FCF Margin | 26.7% | 23.9% | 22.3% | 21.9% |
| Quarter | EPS Est. | EPS Act. | Surprise | EPS | Rev |
|---|---|---|---|---|---|
| Q2'26Latest | $3.31 | $3.49 | +5.4% | ||
| Q2'26 | $3.31 | $3.49 | +5.4% | ||
| Q1'26 | $2.90 | $3.09 | +6.6% | ||
| Q4'25 | $2.63 | $2.85 | +8.4% | ||
| Q3'25 | $2.38 | $2.61 | +9.7% | ||
| Q2'25 | $2.07 | $2.14 | +3.4% | ||
| Q1'25 | $2.20 | $2.19 | -0.5% | ||
| Q4'24 | $1.79 | $1.95 | +8.9% |
Total return is +118.1% (1Y), outperforming the benchmark by +93.1%
| Period | Total Return | vs S&P 500 (Alpha) | Dividend Contribution |
|---|---|---|---|
| YTD | +45.2% | +35.9% | — |
| 1Y | +118.1% | +93.1% | +1.6% |
| 3YCAGR | +65.3% | +42.1% | +7.0% |
| 5YCAGR | +32.5% | +17.6% | +8.8% |
| 10YCAGR | +33.6% | +19.4% | — |
The S&P 500 is at 31.3x trailing P/E — Expensive relative to historical averages.
Quick answers to common questions about Taiwan Semiconductor Manufacturing Company Limited (TSM) valuation, health, and returns.
Taiwan Semiconductor Manufacturing Company Limited is estimated to be fair under our discounted cash flow framework. relative multiples indicate the stock is Cheap versus peers compared to industry peers. trading near fair value (DCF: $435.98)
Taiwan Semiconductor Manufacturing Company Limited has multiple valuation anchors: DCF Intrinsic Value: $435.98 | Peer Relative Fair Value: $20272.81 | Wall Street Analyst Target: $520.00 (implying +12.5% upside). A convergence of these signals offers higher conviction.
Taiwan Semiconductor Manufacturing Company Limited displays excellent financial health with a composite quality score of 95/100, supported by a Altman Z-Score of 2.9 (grey zone), Piotroski F-Score of 8/9, Return on Invested Capital (ROIC) of 42.7%.
Taiwan Semiconductor Manufacturing Company Limited pays a 0.6% dividend yield, covered by a 27% payout ratio with 3 years of growth, supplemented by a 0.0% buyback yield.
Taiwan Semiconductor Manufacturing Company Limited's current growth trajectory is Accelerating. The company achieved +33.0% 1Y revenue growth and +49.8% 1Y EPS growth, compared to its 3Y revenue CAGR of +19.3%.
Wall Street consensus is Buy based on 25 analysts, beating EPS expectations in 92% of recent quarters with a 6-quarter streak. The consensus price target represents a +12.5% change from current levels.
Investment risks for Taiwan Semiconductor Manufacturing Company Limited include: -18.4% 1-year max drawdown, high beta (2.04x market volatility). Volatility risk is characterized by a beta of 2.04x.
No. These computations are purely quantitative model outputs for informational purposes. They do not account for qualitative management shifts or macro events. Always consult a licensed RIA before buying or selling shares.
Disclaimer: This page is for informational purposes only and does not constitute financial advice. All valuation models, scores, and target estimates are automated computations under stated assumptions and should not be relied upon as the sole basis for any investment decision.