ON Semiconductor Corporation (NASDAQ: ON) and Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) are both mid-cap semiconductors – nec companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, risk, analyst recommendations, earnings, valuation, profitability and dividends.

Profitability

This table compares ON Semiconductor Corporation and Taiwan Semiconductor Manufacturing Company Limited’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
ON Semiconductor Corporation 7.22% 22.97% 6.91%
Taiwan Semiconductor Manufacturing Company Limited 30.99% 19.01% 13.56%

Volatility and Risk

ON Semiconductor Corporation has a beta of 2.06, indicating that its stock price is 106% more volatile than the S&P 500. Comparatively, Taiwan Semiconductor Manufacturing Company Limited has a beta of 0.77, indicating that its stock price is 23% less volatile than the S&P 500.

Earnings & Valuation

This table compares ON Semiconductor Corporation and Taiwan Semiconductor Manufacturing Company Limited’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
ON Semiconductor Corporation $3.91 billion 2.33 $182.10 million $0.92 23.30
Taiwan Semiconductor Manufacturing Company Limited $29.43 billion 7.41 $10.24 billion $2.25 18.70

Taiwan Semiconductor Manufacturing Company Limited has higher revenue and earnings than ON Semiconductor Corporation. Taiwan Semiconductor Manufacturing Company Limited is trading at a lower price-to-earnings ratio than ON Semiconductor Corporation, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for ON Semiconductor Corporation and Taiwan Semiconductor Manufacturing Company Limited, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
ON Semiconductor Corporation 1 6 11 0 2.56
Taiwan Semiconductor Manufacturing Company Limited 0 4 2 0 2.33

ON Semiconductor Corporation currently has a consensus target price of $21.44, indicating a potential upside of 0.01%. Taiwan Semiconductor Manufacturing Company Limited has a consensus target price of $27.00, indicating a potential downside of 35.82%. Given ON Semiconductor Corporation’s stronger consensus rating and higher possible upside, equities research analysts clearly believe ON Semiconductor Corporation is more favorable than Taiwan Semiconductor Manufacturing Company Limited.

Institutional & Insider Ownership

96.1% of ON Semiconductor Corporation shares are held by institutional investors. Comparatively, 19.3% of Taiwan Semiconductor Manufacturing Company Limited shares are held by institutional investors. 1.6% of ON Semiconductor Corporation shares are held by company insiders. Comparatively, 1.1% of Taiwan Semiconductor Manufacturing Company Limited shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Dividends

Taiwan Semiconductor Manufacturing Company Limited pays an annual dividend of $0.92 per share and has a dividend yield of 2.2%. ON Semiconductor Corporation does not pay a dividend. Taiwan Semiconductor Manufacturing Company Limited pays out 40.9% of its earnings in the form of a dividend. ON Semiconductor Corporation has increased its dividend for 2 consecutive years.

Summary

ON Semiconductor Corporation beats Taiwan Semiconductor Manufacturing Company Limited on 10 of the 17 factors compared between the two stocks.

About ON Semiconductor Corporation

ON Semiconductor Corporation offers a portfolio of sensors, power management, connectivity, custom and system on chip (SoC), analog, logic, timing, and discrete devices. The Company’s segments include Power Solutions Group, Analog Solutions Group and Image Sensor Group. The Power Solutions Group offers a range of discrete, module and integrated semiconductor products. The Analog Solutions Group designs and develops analog, mixed-signal and logic application specific integrated circuits (ASICs) and application specific standard products (ASSPs), and power solutions. The Image Sensor Group designs and develops complementary metal oxide semiconductor (CMOS) and charge-coupled device (CCD) image sensors, as well as proximity sensors, image signal processors, and actuator drivers for autofocus and image stabilization for various end users in the automotive, industrial, consumer, wireless, medical, and aerospace/defense markets.

About Taiwan Semiconductor Manufacturing Company Limited

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.

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