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Semiconductor stocks have come to a screeching halt in 2022 after a stellar run, with many residing deep in the red year-to-date.
However, one semiconductor stock, in particular, Taiwan Semiconductor Manufacturing Company (TSM - Free Report) , saw serious attention from investors earlier in the week.
Why?
It was unveiled that Warren Buffett-led Berkshire Hathaway (BRK.B - Free Report) started a position in the company, buying approximately 60 million TSM shares for roughly $4.1 billion.
Many are familiar with Buffett, often called the “Oracle of Omaha.”
And to put it simply, investors closely watch each of his moves.
TSM shares tacked on 10% in value in the following trading period after the news broke, providing nice relief for investors.
Still, year-to-date, TSM shares are down roughly 30%, underperforming the S&P 500 by a fair margin.
Image Source: Zacks Investment Research
With Warren Buffett seeing value in the stock, it raises a valid question: should investors take a closer look at TSM shares?
Let’s take a deeper dive.
Growth Outlook & Quarterly Performance
TSM carries a strong growth profile, with earnings and revenue forecasted to climb 52% and 27% in FY22, respectively.
Still, it’s worth noting that the growth slows down in FY23, with earnings forecasted to decrease roughly 9% on top of estimated Y/Y revenue growth of 7%.
Further, TSM is on a strong earnings streak, exceeding the Zacks Consensus EPS Estimate in eight consecutive quarters.
Sales results have left some to be desired, with the company falling short of revenue expectations in four of its last five quarters. Below is a chart illustrating the company’s revenue on a quarterly basis.
Image Source: Zacks Investment Research
Dividends & Valuation
Who doesn’t like getting paid? Fortunately for those who seek income, TSM has that covered; the company rewards its shareholders with its annual dividend, currently yielding 1.7% paired with a sizable 12% five-year annualized dividend growth rate.
Image Source: Zacks Investment Research
TSM’s forward earnings multiple currently sits at 12.7X, below its 19.9X five-year median and representing a 44% discount relative to the Zacks Computer and Technology sector.
Of course, it’s important to remember that the company is experiencing massive earnings growth, pushing down P/E multiples.
Image Source: Zacks Investment Research
Bottom Line
Many investors mimic Warren Buffett, closely following all of his moves. With his track record of success, it’s easy to see why.
Earlier in the week, news of Berkshire Hathaway (BRK.B - Free Report) taking a position in Taiwan Semiconductor Manufacturing sent TSM shares flying.
TSM carries a strong growth profile for its current fiscal year (FY22), with the growth forecasted to slow in FY23. In addition, the company has strong dividend metrics and has shown a commitment to increasing its payout.
Further, the company’s forward P/E ratio sits well below its five-year median, partly thanks to massive earnings growth pushing the multiple down.
For those interested in semiconductor stocks and mimicking the Oracle of Omaha, Taiwan Semiconductor Manufacturing (TSM - Free Report) shares precisely fit those parameters.
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What's Going On With TSM Shares?
Semiconductor stocks have come to a screeching halt in 2022 after a stellar run, with many residing deep in the red year-to-date.
However, one semiconductor stock, in particular, Taiwan Semiconductor Manufacturing Company (TSM - Free Report) , saw serious attention from investors earlier in the week.
Why?
It was unveiled that Warren Buffett-led Berkshire Hathaway (BRK.B - Free Report) started a position in the company, buying approximately 60 million TSM shares for roughly $4.1 billion.
Many are familiar with Buffett, often called the “Oracle of Omaha.”
And to put it simply, investors closely watch each of his moves.
TSM shares tacked on 10% in value in the following trading period after the news broke, providing nice relief for investors.
Still, year-to-date, TSM shares are down roughly 30%, underperforming the S&P 500 by a fair margin.
Image Source: Zacks Investment Research
With Warren Buffett seeing value in the stock, it raises a valid question: should investors take a closer look at TSM shares?
Let’s take a deeper dive.
Growth Outlook & Quarterly Performance
TSM carries a strong growth profile, with earnings and revenue forecasted to climb 52% and 27% in FY22, respectively.
Still, it’s worth noting that the growth slows down in FY23, with earnings forecasted to decrease roughly 9% on top of estimated Y/Y revenue growth of 7%.
Further, TSM is on a strong earnings streak, exceeding the Zacks Consensus EPS Estimate in eight consecutive quarters.
Sales results have left some to be desired, with the company falling short of revenue expectations in four of its last five quarters. Below is a chart illustrating the company’s revenue on a quarterly basis.
Image Source: Zacks Investment Research
Dividends & Valuation
Who doesn’t like getting paid? Fortunately for those who seek income, TSM has that covered; the company rewards its shareholders with its annual dividend, currently yielding 1.7% paired with a sizable 12% five-year annualized dividend growth rate.
Image Source: Zacks Investment Research
TSM’s forward earnings multiple currently sits at 12.7X, below its 19.9X five-year median and representing a 44% discount relative to the Zacks Computer and Technology sector.
Of course, it’s important to remember that the company is experiencing massive earnings growth, pushing down P/E multiples.
Image Source: Zacks Investment Research
Bottom Line
Many investors mimic Warren Buffett, closely following all of his moves. With his track record of success, it’s easy to see why.
Earlier in the week, news of Berkshire Hathaway (BRK.B - Free Report) taking a position in Taiwan Semiconductor Manufacturing sent TSM shares flying.
TSM carries a strong growth profile for its current fiscal year (FY22), with the growth forecasted to slow in FY23. In addition, the company has strong dividend metrics and has shown a commitment to increasing its payout.
Further, the company’s forward P/E ratio sits well below its five-year median, partly thanks to massive earnings growth pushing the multiple down.
For those interested in semiconductor stocks and mimicking the Oracle of Omaha, Taiwan Semiconductor Manufacturing (TSM - Free Report) shares precisely fit those parameters.