Reviewing Taiwan Semiconductor Mfg. (TSM) and Plexus (PLXS)

Taiwan Semiconductor Mfg. (NYSE: TSM) and Plexus (NASDAQ:PLXS) are both mid-cap technology companies, but which is the better investment? We will contrast the two companies based on the strength of their risk, dividends, profitability, valuation, institutional ownership, analyst recommendations and earnings.

Profitability

This table compares Taiwan Semiconductor Mfg. and Plexus’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Taiwan Semiconductor Mfg. 35.08% 24.18% 17.75%
Plexus -0.57% 11.24% 5.81%

Dividends

Taiwan Semiconductor Mfg. pays an annual dividend of $0.92 per share and has a dividend yield of 2.0%. Plexus does not pay a dividend. Taiwan Semiconductor Mfg. pays out 40.5% of its earnings in the form of a dividend. Plexus has raised its dividend for 3 consecutive years.

Analyst Recommendations

This is a breakdown of current ratings for Taiwan Semiconductor Mfg. and Plexus, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Taiwan Semiconductor Mfg. 0 4 4 0 2.50
Plexus 0 5 2 0 2.29

Taiwan Semiconductor Mfg. currently has a consensus target price of $27.00, suggesting a potential downside of 41.79%. Plexus has a consensus target price of $59.17, suggesting a potential downside of 1.34%. Given Plexus’ higher probable upside, analysts clearly believe Plexus is more favorable than Taiwan Semiconductor Mfg..

Institutional and Insider Ownership

19.4% of Taiwan Semiconductor Mfg. shares are held by institutional investors. Comparatively, 93.4% of Plexus shares are held by institutional investors. 1.1% of Taiwan Semiconductor Mfg. shares are held by insiders. Comparatively, 3.7% of Plexus shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Risk & Volatility

Taiwan Semiconductor Mfg. has a beta of 0.74, indicating that its share price is 26% less volatile than the S&P 500. Comparatively, Plexus has a beta of 0.88, indicating that its share price is 12% less volatile than the S&P 500.

Valuation and Earnings

This table compares Taiwan Semiconductor Mfg. and Plexus’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Taiwan Semiconductor Mfg. $32.11 billion 7.49 $11.27 billion $2.27 20.43
Plexus $2.53 billion 0.80 $112.06 million ($0.51) -117.59

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

Summary

Taiwan Semiconductor Mfg. beats Plexus on 11 of the 17 factors compared between the two stocks.

Taiwan Semiconductor Mfg. Company Profile

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.

Plexus Company Profile

Plexus Corp. (Plexus) and its subsidiaries are engaged in the electronic manufacturing services (EMS) industry. The Company delivers end-to-end solutions for customers in the Americas (AMER), Europe, Middle East, and Africa (EMEA) and Asia-Pacific (APAC) regions. The Company’s segments are AMER, APAC and EMEA. The Company’s customer-focused solutions model integrates product conceptualization, design, commercialization, manufacturing, fulfillment and sustaining solutions. The Company delivers solutions to its customers through its product realization value stream. The Company provides a range of aftermarket services, including complex repair, refurbishment and product support for products it manufactures. The Company provides customer service to approximately 140 branded product companies in the healthcare/life sciences, industrial/commercial, networking/communications and defense/security/aerospace market sectors.

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