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華爾街日報Is It Too Late To Consider Taiwan Semiconductor Manufacturing (NYSE:TSM) After Strong Share Gains
- Wondering if Taiwan Semiconductor Manufacturing's share price still offers reasonable value after a strong run? This article walks through what the current market price might be implying.
- The stock last closed at US$327.43, with returns of 9.3% over 7 days, 11.1% over 30 days, 2.4% year to date and 56.5% over 1 year, while the 3 year return is very large and the 5 year return is 184.2%.
- Recent attention on Taiwan Semiconductor Manufacturing has largely focused on its role as a key contract chipmaker for global technology companies and its position in the semiconductor supply chain. Media coverage has also highlighted its importance for advanced manufacturing in Taiwan, which can shape how investors think about long term demand and risk.
- Our valuation checks give Taiwan Semiconductor Manufacturing a score of 3 out of 6. Next we will walk through the main valuation methods behind that number, before looking at a more complete way to think about what the stock might be worth.
Approach 1: Taiwan Semiconductor Manufacturing Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow, or DCF, model estimates what a company might be worth today by projecting its future cash flows and then discounting those back to a present value.
For Taiwan Semiconductor Manufacturing, the 2 Stage Free Cash Flow to Equity model starts with last twelve month free cash flow of about NT$802.4b. Analysts provide explicit free cash flow estimates for several years, and Simply Wall St then extrapolates those projections further out. By 2035, the model is using an extrapolated free cash flow figure of roughly NT$3,272.8b, expressed in today’s money using a discount rate.
Aggregating these discounted cash flows leads to an estimated intrinsic value of US$206.81 per share. Compared with the recent share price of US$327.43, the model implies that Taiwan Semiconductor Manufacturing is around 58.3% overvalued based on these cash flow assumptions.
Result: OVERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Taiwan Semiconductor Manufacturing may be overvalued by 58.3%. Discover 875 undervalued stocks or create your own screener to find better value opportunities.
Approach 2: Taiwan Semiconductor Manufacturing Price vs Earnings
For profitable companies, the P/E ratio is a useful way to think about value because it links what you pay for each share to the earnings that business is currently generating. Investors usually accept a higher P/E when they expect stronger earnings growth or see lower risk, and a lower P/E when growth expectations are more modest or risks feel higher.
Taiwan Semiconductor Manufacturing is currently trading on a P/E of 28.1x. That sits below the Semiconductor industry average P/E of 41.2x and also below the peer group average of 65.0x. On the face of it, the stock is on a lower multiple than many names in its space.
Simply Wall St’s Fair Ratio for Taiwan Semiconductor Manufacturing comes in at 38.2x. This is a proprietary estimate of what a “normal” P/E could look like for the company, given its earnings growth profile, profit margins, industry, market cap and specific risk factors. Because it is tailored to the company, this Fair Ratio can give you a more rounded reference point than a simple comparison with peers or the broad industry. With the current P/E of 28.1x sitting below the Fair Ratio of 38.2x, the multiples suggest the stock is trading below that implied fair level.
Result: UNDERVALUED
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Upgrade Your Decision Making: Choose your Taiwan Semiconductor Manufacturing Narrative
Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, which are simply your story about a company, translated into assumptions for future revenue, earnings and margins that flow into a forecast and a Fair Value that you can easily compare with today’s price.
On Simply Wall St’s Community page, millions of investors use Narratives as a straightforward tool to connect what they believe about a business with numbers on a valuation model. They can then see in one place whether their Fair Value suggests the stock might be expensive or cheap relative to the current share price, and how that view shifts as new information like earnings or news headlines updates the forecast automatically.
For Taiwan Semiconductor Manufacturing, one investor might build a Narrative around it as the “AI supply backbone” with high margins and a Fair Value of about US$310 per share. Another might focus more on risks like geopolitical exposure or overseas fab costs and arrive at a much lower Fair Value. Seeing these side by side can help you decide which story you find more convincing and what that means for your own decision making.
Do you think there's more to the story for Taiwan Semiconductor Manufacturing? Head over to our Community to see what others are saying!
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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