Alphabet (NASDAQ:GOOG) and Taiwan Semiconductor Mfg. (NYSE:TSM) are both large-cap computer and technology companies, but which is the superior business? We will compare the two companies based on the strength of their risk, profitability, dividends, institutional ownership, valuation, earnings and analyst recommendations.
Analyst Recommendations
This is a breakdown of recent ratings and price targets for Alphabet and Taiwan Semiconductor Mfg., as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| Alphabet | 0 | 1 | 26 | 1 | 3.00 |
| Taiwan Semiconductor Mfg. | 1 | 1 | 5 | 0 | 2.57 |
Alphabet presently has a consensus target price of $1,584.75, indicating a potential upside of 5.95%. Taiwan Semiconductor Mfg. has a consensus target price of $47.50, indicating a potential downside of 23.24%. Given Alphabet's stronger consensus rating and higher possible upside, equities analysts clearly believe Alphabet is more favorable than Taiwan Semiconductor Mfg..
Profitability
This table compares Alphabet and Taiwan Semiconductor Mfg.'s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| Alphabet | 20.71% | 17.43% | 12.91% |
| Taiwan Semiconductor Mfg. | 34.54% | 24.82% | 17.78% |
Insider & Institutional Ownership
33.0% of Alphabet shares are owned by institutional investors. Comparatively, 18.7% of Taiwan Semiconductor Mfg. shares are owned by institutional investors. 13.0% of Alphabet shares are owned by company insiders. Comparatively, 1.1% of Taiwan Semiconductor Mfg. shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.
Earnings & Valuation
This table compares Alphabet and Taiwan Semiconductor Mfg.'s top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| Alphabet | $161.86 billion | 6.31 | $34.34 billion | $51.56 | 29.01 |
| Taiwan Semiconductor Mfg. | $34.63 billion | 9.27 | $11.83 billion | $2.15 | 28.78 |
Alphabet has higher revenue and earnings than Taiwan Semiconductor Mfg.. Taiwan Semiconductor Mfg. is trading at a lower price-to-earnings ratio than Alphabet, indicating that it is currently the more affordable of the two stocks.
Volatility & Risk
Alphabet has a beta of 1.05, suggesting that its stock price is 5% more volatile than the S&P 500. Comparatively, Taiwan Semiconductor Mfg. has a beta of 0.88, suggesting that its stock price is 12% less volatile than the S&P 500.
Summary
Alphabet beats Taiwan Semiconductor Mfg. on 11 of the 15 factors compared between the two stocks.
