Flextronics International (NASDAQ: FLEX) and Taiwan Semiconductor Manufacturing (NYSE:TSM) are both mid-cap computer and technology companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, profitability, analyst recommendations, risk, valuation, institutional ownership and earnings.

Analyst Recommendations

This is a breakdown of recent recommendations for Flextronics International and Taiwan Semiconductor Manufacturing, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Flextronics International 0 2 7 0 2.78
Taiwan Semiconductor Manufacturing 0 3 2 0 2.40

Flextronics International currently has a consensus price target of $17.56, suggesting a potential upside of 0.24%. Taiwan Semiconductor Manufacturing has a consensus price target of $27.00, suggesting a potential downside of 33.86%. Given Flextronics International’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Flextronics International is more favorable than Taiwan Semiconductor Manufacturing.

Dividends

Taiwan Semiconductor Manufacturing pays an annual dividend of $0.92 per share and has a dividend yield of 2.3%. Flextronics International does not pay a dividend. Taiwan Semiconductor Manufacturing pays out 42.6% of its earnings in the form of a dividend. Taiwan Semiconductor Manufacturing has raised its dividend for 2 consecutive years.

Profitability

This table compares Flextronics International and Taiwan Semiconductor Manufacturing’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Flextronics International 1.41% 20.46% 4.30%
Taiwan Semiconductor Manufacturing 36.11% 25.61% 18.51%

Institutional & Insider Ownership

94.9% of Flextronics International shares are held by institutional investors. Comparatively, 19.4% of Taiwan Semiconductor Manufacturing shares are held by institutional investors. 0.8% of Flextronics International shares are held by company insiders. Comparatively, 1.1% of Taiwan Semiconductor Manufacturing shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Volatility & Risk

Flextronics International has a beta of 0.83, meaning that its stock price is 17% less volatile than the S&P 500. Comparatively, Taiwan Semiconductor Manufacturing has a beta of 0.74, meaning that its stock price is 26% less volatile than the S&P 500.

Valuation and Earnings

This table compares Flextronics International and Taiwan Semiconductor Manufacturing’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Flextronics International $23.99 billion 0.39 $1.22 billion $0.63 27.81
Taiwan Semiconductor Manufacturing $32.32 billion 6.55 $20.86 billion $2.16 18.90

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

Summary

Taiwan Semiconductor Manufacturing beats Flextronics International on 11 of the 17 factors compared between the two stocks.

Flextronics International Company Profile

Flex Ltd, formerly Flextronics International Ltd. provides design, engineering, manufacturing, and supply chain services and solutions. The Company designs, builds, ships and services packaged consumer electronics and industrial products for original equipment manufacturers (OEMs). Its segments include High Reliability Solutions (HRS), Consumer Technologies Group (CTG), Industrial and Emerging Industries (IEI) and Communications & Enterprise Compute (CEC). The HRS segment consists of its medical business, automotive business, and defense and aerospace businesses. The CTG segment includes its mobile devices business, consumer electronics business and high-volume computing business. The IEI segment consists of semiconductor and capital equipment, office solutions, household industrial and lifestyle, industrial automation and kiosks, energy and metering, and lighting. The CEC segment includes radio access base stations, remote radio heads, and small cells for wireless infrastructure.

Taiwan Semiconductor Manufacturing 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.

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