Earnings Calendar (14 Apr 2025)
I am interested in the earnings of Goldman Sachs, Citi, Bank of America, United, ASML, TSMC and Netflix.
Let us look at TSMC.
The Technical Analysis has a “Strong Sell” rating, in contrast to the “Strong Buy” recommendation from Analysts Sentiments. The target price of 241.69 suggests a (potential) upside of over 53%.
Below is the financial performance review using GROK:
Revenue
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Growth Trend: TSMC's revenue has shown strong growth, increasing from $25.724 billion in 2015 to $88.552 billion in 2024. The 10-year compound annual growth rate (CAGR) for revenue is 13.8%, reflecting robust expansion.
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Key Milestones: Revenue growth was particularly strong in 2020 (34.3%) and 2021 (20.5%), driven by global demand for semiconductors. There was a slight decline of 6.3% in 2023 due to market cyclicality, followed by a significant recovery of 28.5% in 2024.
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Competitive Advantage: TSMC’s consistent revenue growth underscores its position as the world’s leading semiconductor foundry, benefiting from its advanced manufacturing capabilities and strong demand in tech sectors like smartphones, AI, and automotive.
Operating Profit
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Growth Trend: Operating profit grew significantly from $9.812 billion in 2015 to $40.585 billion in 2024. The operating margin has remained high, increasing from 38.1% in 2015 to 45.7% in 2024.
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Operating Margin: The operating margin has averaged around 35-46% over the decade, with a peak of 49.5% in 2022, reflecting exceptional profitability and cost efficiency.
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Competitive Advantage: The high and improving operating margin highlights TSMC’s operational excellence, driven by its technological leadership in advanced nodes (e.g., 3nm, 5nm) and economies of scale in semiconductor manufacturing.
Earnings Per Share (EPS)
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Growth Trend: EPS increased from $1.78 in 2015 to $6.95 in 2024, with a 10-year CAGR of 16.1%. Notable growth includes 54.8% in 2020 and 51.7% in 2022, though there was a -17.2% decline in 2023, followed by a 34.3% recovery in 2024.
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Volatility: EPS growth has been mostly positive, with the 2023 decline reflecting semiconductor market challenges, but the overall trend is upward.
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Competitive Advantage: The strong EPS growth demonstrates TSMC’s ability to deliver shareholder value, supported by its dominant market position and ability to meet growing global chip demand.
Price-to-Earnings (P/E) Ratio
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Valuation: The P/E ratio is 22.6, indicating that TSMC is valued at a premium, which is reasonable given its growth prospects and leadership in the semiconductor industry.
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10-Year Median Returns: The 10-year median return on assets (ROA) is 18.6%, return on equity (ROE) is 26.5%, and return on invested capital (ROIC) is 21.8%, reflecting exceptional returns.
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Competitive Advantage: The premium P/E ratio, combined with high ROA and ROE, underscores TSMC’s ability to generate strong returns, driven by its technological edge and critical role in the global tech supply chain.
Free Cash Flow (FCF)
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Growth Trend: The EV/FCF ratio is 28.7, and the 10-year CAGR for FCF is 20.2%, indicating robust cash flow generation. The 10-year median FCF margin is 23.5%, reflecting strong cash flow relative to revenue.
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Capital Structure: The median debt/equity ratio is 0.2, and debt/assets is 0.1, indicating a low-leverage position.
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Competitive Advantage: TSMC’s strong FCF growth and minimal debt provide significant financial flexibility to invest in R&D, expand capacity (e.g., new fabs), and return capital to shareholders, reinforcing its competitive position.
Overall Assessment
Over the past 10 years, TSMC has demonstrated exceptional growth and resilience, with revenue growing at a 13.8% CAGR and EPS at a 16.1% CAGR. Operating margins have expanded (from 38.1% to 45.7%), and the company has consistently raised dividends, reflecting financial strength. The P/E ratio of 22.6, alongside high ROE (26.5% median) and ROIC (21.8% median), indicates a premium valuation justified by its market leadership. TSMC’s strong FCF growth (20.2% CAGR), high gross margin (56.1% in 2024), and low debt (debt/equity of 0.2) underscore its competitive advantages, including its technological leadership in advanced semiconductor nodes, unmatched scale, and critical role in the global tech ecosystem. Despite a slight revenue dip in 2023, the 2024 recovery highlights its ability to navigate industry cycles effectively.
The forecast for EPS and revenue is 2.07 and $25.37 billion, respectively. TSMC is an attractive offering with strong growth and profitability, backed by low debt (leverage) and strong cash flow.
This is a company that deserves more research and good consideration for shortlisting.
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