How Taiwan Semiconductor Manufacturing Company Limited (TSM) Works From A Technical Perspective

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) traded with a subtraction of -$1.04 to $108.22 on Wednesday, a downside of -0.95 percent. An average of 6,051,444 shares of common stock have been traded in the last five days. There was a fall of -$3.79 in the past week. The last 20 days have seen an average of 6,491,246 shares traded, while the 50-day average volume stands at 7,335,692.

TSM stock has decreased by -11.87% in the last month. The company shares reached their 1-month lowest point of $107.60 on 10/06/21. With the stock rallying to its 52-week high on 02/16/21, shares of the company touched a low of $82.76 and a high of $142.20 in 52 weeks. In spite of this, the price is down -23.89% from the 52-week high.


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Valuation Metrics

Taiwan Semiconductor Manufacturing Company Limited (TSM) has a trailing price-to-earnings (P/E) ratio of 28.44, which compares with the 31.10 for the broader industry and 36.37 for the sector. This means investors are optimistic about the stock’s future prospects. In the last five years, Taiwan Semiconductor Manufacturing Company Limited’s PE ratio has ranged between 41.78 and 14.52. The stock’s beta is 0.92. Other valuation ratios to consider include the trailing price-to-sales (P/S) ratio at 10.12, the price-to-book (PB) ratio at 7.91, and the price-to-cash flow ratio at 6471.23.

Financial Health

The quick ratio of Taiwan Semiconductor Manufacturing Company Limited for the three months ended June 29 was 1.70, and the current ratio was 1.90, indicating that the company is able to meet its debt obligations. Further, the company has a long term debt to equity ratio of 0.22 and a total debt to equity ratio of 0.29 for the quarter ending June 29. On the profitability front, the trailing 12-month gross margin is 52.40% against a 5-year average of 49.6%. Taiwan Semiconductor Manufacturing Company Limited’s EBITDA margin for the year ending June 29 is 67.04%, while its operating margin for the same period stands at 41.50%. Its gross profit as reported stood at $25.33 billion compared to revenue of $47.69 billion.

For investors, determining the potential profitability of the investment also depends on the performance of the company’s management. In the past 12 months, Taiwan Semiconductor Manufacturing Company Limited’s return on assets was 19.40%, compared to 18.2% over the last five years. In the past year, the return on investment has been 22.50%, and the 5-year average is 21.3%. Meanwhile, the return on equity (ROE) for the past 12 months has been 29.30% and the 5-year average holds at 24.9%. For the broader industry, ROE averaged -0.25 over the past year.

Earnings Surprise

The analyst consensus anticipated Taiwan Semiconductor Manufacturing Company Limited’s latest quarter earnings to come in at $0.93 per share, but it turned out to be $0.93, a 0.00% surprise. For the quarter, EBITDA amounted to $8.95 billion.

Technical Picture

From a technical analysis perspective, let’s take a brief look at Taiwan Semiconductor Manufacturing Company Limited (TSM) price momentum. RSI 9-day as of the close on 05 October was 18.76%, suggesting the stock is oversold, with historical volatility in this time frame at 19.99%.

As of today, TSM’s price is $109.86 -3.40% or -$3.79 from its 5-day moving average. TSM is currently trading -11.53% lower than its 20-day SMA and -4.12% lower than its 100-day SMA. However, the stock’s current price level is -5.03% below the SMA50 and +3.40% above the SMA200.

The stochastic %K and %D were 3.74% and 5.33%, respectively, and the average true range (ATR) was 2.07. With the 14-day stochastic at 1.79% and the average true range at 2.13, the RSI (14) stands at 26.99%. The stock has reached -2.92 on the 9-day MACD Oscillator while the 14-day reading was at -4.45.

Analyst Ratings

Susquehanna upgraded Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM) to a a Neutral rating in its most recent analyst report. Previously, the stock was rated as a a Negative.The consensus rating for Taiwan Semiconductor Manufacturing Company Limited (TSM) among analysts is Buy. According to current brokerage recommendations, 0 brokerage firms advise that investors sell TSM, while 4 suggest investors hold. There are 0 analysts who rate the stock as underweight. The stock is rated overweight by 8 analysts, while 26 others rate it as a “buy”.

What is TSM’s price target for the next 12 months?

Analysts predict a range of price targets between $120.00 and $204.00, with a median target of $139.00. Taking a look at these predictions, the average price target given by analysts for Taiwan Semiconductor Manufacturing Company Limited (TSM) stock is $150.07.

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