Contrasting Taiwan Semiconductor Manufacturing (TSM) and United Microelectronics Corporation (UMC)
Taiwan Semiconductor Manufacturing (NYSE: TSM) and United Microelectronics Corporation (NYSE:UMC) are both mid-cap computer and technology companies, but which is the better stock? We will compare the two companies based on the strength of their risk, dividends, institutional ownership, earnings, analyst recommendations, profitability and valuation.
Earnings & Valuation
This table compares Taiwan Semiconductor Manufacturing and United Microelectronics Corporation’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Taiwan Semiconductor Manufacturing||$32.06 billion||5.79||$20.69 billion||$2.16||16.57|
|United Microelectronics Corporation||$5.00 billion||1.12||$1.88 billion||$0.13||17.62|
Taiwan Semiconductor Manufacturing has higher revenue and earnings than United Microelectronics Corporation. Taiwan Semiconductor Manufacturing is trading at a lower price-to-earnings ratio than United Microelectronics Corporation, indicating that it is currently the more affordable of the two stocks.
This table compares Taiwan Semiconductor Manufacturing and United Microelectronics Corporation’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Taiwan Semiconductor Manufacturing||36.11%||25.61%||18.51%|
|United Microelectronics Corporation||6.52%||4.58%||2.60%|
Taiwan Semiconductor Manufacturing pays an annual dividend of $0.92 per share and has a dividend yield of 2.6%. United Microelectronics Corporation pays an annual dividend of $0.06 per share and has a dividend yield of 2.6%. Taiwan Semiconductor Manufacturing pays out 42.6% of its earnings in the form of a dividend. United Microelectronics Corporation pays out 46.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. United Microelectronics Corporation has increased its dividend for 2 consecutive years. United Microelectronics Corporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Risk and Volatility
Taiwan Semiconductor Manufacturing has a beta of 0.77, suggesting that its share price is 23% less volatile than the S&P 500. Comparatively, United Microelectronics Corporation has a beta of 0.6, suggesting that its share price is 40% less volatile than the S&P 500.
Institutional and Insider Ownership
19.7% of Taiwan Semiconductor Manufacturing shares are owned by institutional investors. Comparatively, 5.7% of United Microelectronics Corporation shares are owned by institutional investors. 1.1% of Taiwan Semiconductor Manufacturing shares are owned by insiders. Comparatively, 8.0% of United Microelectronics Corporation shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.
This is a summary of current ratings for Taiwan Semiconductor Manufacturing and United Microelectronics Corporation, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Taiwan Semiconductor Manufacturing||0||3||2||0||2.40|
|United Microelectronics Corporation||8||1||0||0||1.11|
Taiwan Semiconductor Manufacturing currently has a consensus price target of $27.50, indicating a potential downside of 23.16%. United Microelectronics Corporation has a consensus price target of $2.10, indicating a potential downside of 8.30%. Given United Microelectronics Corporation’s higher probable upside, analysts plainly believe United Microelectronics Corporation is more favorable than Taiwan Semiconductor Manufacturing.
Taiwan Semiconductor Manufacturing beats United Microelectronics Corporation on 12 of the 17 factors compared between the two stocks.
About Taiwan Semiconductor Manufacturing
Taiwan Semiconductor Manufacturing Company Limited (TSMC) is a semiconductor foundry. The Company is engaged in the manufacturing, selling, packaging, testing and computer-aided design of integrated circuits and other semiconductor devices and the manufacturing of masks. It operates through foundry segment. The foundry segment is engaged in manufacturing, selling, packaging, testing and computer-aided design of integrated circuits (IC) and other semiconductor devices and the manufacturing of masks. It operates three 12-inch wafer fabs, four eight-inch wafer fabs, one six-inch wafer fab (fab 2) and two backend fabs (advanced backend fab 1 and 2). It also manages two eight-inch fabs at its subsidiaries, WaferTech, LLC in the United States and TSMC China Company Limited. Its exploratory work focuses on transistors and technologies, such as three dimensional (3D) structures, strained-layer complementary metal-oxide semiconductor (CMOS), high-mobility materials and 3D IC devices.
About United Microelectronics Corporation
United Microelectronics Corporation is a global semiconductor foundry. The Company provides integrated circuit (IC) production for applications spanning every sector of the electronics industry. The Company operates through two segments: wafer fabrication and new business. The primary operating activity of the Company’s wafer fabrication segment is the manufacture of chips to the design specifications of its customers by using its own processes and techniques. The new business segment primarily includes researching, developing, manufacturing, and providing solar energy and new generation light-emitting diode (LED). The Company maintains a customer base across various industries, including communication, consumer electronics, computer, memory and others, while focusing on manufacturing for applications, including networking, telecommunications, Internet, multimedia, personal computers (PCs) and graphics.
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