PayPal (NASDAQ:PYPL) and Taiwan Semiconductor Manufacturing (NYSE:TSM) are both large-cap computer and technology companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, analyst recommendations, dividends, profitability, valuation, risk and earnings.
Profitability
This table compares PayPal and Taiwan Semiconductor Manufacturing's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| PayPal | 15.48% | 18.31% | 5.40% |
| Taiwan Semiconductor Manufacturing | 37.94% | 28.73% | 20.16% |
Valuation & Earnings
This table compares PayPal and Taiwan Semiconductor Manufacturing's revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| PayPal | $17.77 billion | 17.70 | $2.46 billion | $2.45 | 109.60 |
| Taiwan Semiconductor Manufacturing | $34.63 billion | 18.00 | $11.83 billion | $3.39 | 35.46 |
Taiwan Semiconductor Manufacturing has higher revenue and earnings than PayPal. Taiwan Semiconductor Manufacturing is trading at a lower price-to-earnings ratio than PayPal, indicating that it is currently the more affordable of the two stocks.
Institutional & Insider Ownership
82.3% of PayPal shares are owned by institutional investors. Comparatively, 18.3% of Taiwan Semiconductor Manufacturing shares are owned by institutional investors. 0.1% of PayPal shares are owned by insiders. Comparatively, 1.1% of Taiwan Semiconductor Manufacturing shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
Risk & Volatility
PayPal has a beta of 1.12, indicating that its stock price is 12% more volatile than the S&P 500. Comparatively, Taiwan Semiconductor Manufacturing has a beta of 0.99, indicating that its stock price is 1% less volatile than the S&P 500.
Analyst Recommendations
This is a summary of current recommendations for PayPal and Taiwan Semiconductor Manufacturing, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| PayPal | 0 | 5 | 35 | 1 | 2.90 |
| Taiwan Semiconductor Manufacturing | 2 | 1 | 6 | 0 | 2.44 |
PayPal presently has a consensus price target of $279.2051, indicating a potential upside of 3.85%. Taiwan Semiconductor Manufacturing has a consensus price target of $106.75, indicating a potential downside of 11.29%. Given PayPal's stronger consensus rating and higher possible upside, analysts clearly believe PayPal is more favorable than Taiwan Semiconductor Manufacturing.
Summary
Taiwan Semiconductor Manufacturing beats PayPal on 8 of the 15 factors compared between the two stocks.
