Value
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 3.3 |
| P/S | 10.0 |
| EV/EBITDA | 8.5 |
| Fwd P/E | 5.9 |
| PEG | 5.2 |
| Analyst target | 4.0 |
- ▸Forward P/E: 21.9x
- ▸PEG: 1.46
TSM · Why this verdict
Why Taiwan Semiconductor Manufactur (TSM) is rated BUY WAIT
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictBUY WAIT
Overall score7.1/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
The company delivers 35% annual revenue growth against a 47% margin structure and a wide economic moat at a PEG of 1.29, with four consecutive earnings beats reinforcing execution discipline. The 2.4-to-1 risk/reward is favorable, though weak momentum and free cash flow converting at only 38% of net income justify a small initial position pending a technical breakout.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Revenue is expanding at 35% year-over-year, a rate the data identifies as the highest-scoring dimension in the overall assessment, sustaining a growth trajectory well above most peers in the covered universe. Growth breakdown | Revenue growth remains above 20% YoY for the next two reporting periods, sustaining above-consensus expansion. | →Stable |
| CounterA deceleration from 35% toward mid-double digits would meaningfully compress the forward P/E of 21.9x given the growth premium embedded in the current multiple, and the sector carries a negative modifier that can amplify valuation compression during a slowdown. | ||
The company sustains a wide economic moat backed by net margins of 47%, ROE of 36%, and a near-perfect Piotroski F-Score of 9 out of 9, placing it in the top tier of its peer group for both return quality and balance-sheet strength. Peer comparisons identify both ROE and margins as best-in-class, supporting a durable quality premium over the long cycle. Quality breakdown | Net margin holds above 45% and ROE sustains above 30% over the next 12 months as moat-driven pricing and cost advantages persist. | →Stable |
| CounterA wide moat assessment depends on sustained competitive positioning; if demand for advanced capacity softens, the fixed cost structure may compress margins below the current level, making the franchise appear more cyclical than the quality scorecard implies. | ||
The company has beaten consensus earnings estimates in each of the four most recent quarters, with an average positive surprise of approximately 7%, demonstrating consistent delivery above expectations across varied conditions. Earnings | EPS surprises remain positive in both of the next two quarterly reports, consistent with the unbroken four-quarter beat cadence. | →Stable |
| CounterWith approximately 3.4% remaining to the take-profit level, near-term reward is compressed; a guidance reset or narrowing surprise at the upcoming report could disappoint a market accustomed to consistent outperformance. | ||
Free cash flow converts at only 38% of net income — a level the data flags as a quality red flag — limiting the realized cash available for reinvestment or shareholder return relative to what the income statement alone implies. Quality breakdown | FCF as a percentage of net income rises toward 60% or above over the next 12 months as the gap between reported earnings and cash generation narrows. | →Stable |
| CounterIf the FCF-to-net-income gap persists, the quality case resting on strong margins and ROE may overstate accessible cash; a premium multiple paired with weak cash conversion can be a persistent source of disappointment if the conversion rate remains depressed. | ||
Revenue is expanding at 35% year-over-year, a rate the data identifies as the highest-scoring dimension in the overall assessment, sustaining a growth trajectory well above most peers in the covered universe.
→StableGrowth breakdown
- Expectation
- Revenue growth remains above 20% YoY for the next two reporting periods, sustaining above-consensus expansion.
CounterA deceleration from 35% toward mid-double digits would meaningfully compress the forward P/E of 21.9x given the growth premium embedded in the current multiple, and the sector carries a negative modifier that can amplify valuation compression during a slowdown.
The company sustains a wide economic moat backed by net margins of 47%, ROE of 36%, and a near-perfect Piotroski F-Score of 9 out of 9, placing it in the top tier of its peer group for both return quality and balance-sheet strength. Peer comparisons identify both ROE and margins as best-in-class, supporting a durable quality premium over the long cycle.
→StableQuality breakdown
- Expectation
- Net margin holds above 45% and ROE sustains above 30% over the next 12 months as moat-driven pricing and cost advantages persist.
CounterA wide moat assessment depends on sustained competitive positioning; if demand for advanced capacity softens, the fixed cost structure may compress margins below the current level, making the franchise appear more cyclical than the quality scorecard implies.
The company has beaten consensus earnings estimates in each of the four most recent quarters, with an average positive surprise of approximately 7%, demonstrating consistent delivery above expectations across varied conditions.
→StableEarnings
- Expectation
- EPS surprises remain positive in both of the next two quarterly reports, consistent with the unbroken four-quarter beat cadence.
CounterWith approximately 3.4% remaining to the take-profit level, near-term reward is compressed; a guidance reset or narrowing surprise at the upcoming report could disappoint a market accustomed to consistent outperformance.
Free cash flow converts at only 38% of net income — a level the data flags as a quality red flag — limiting the realized cash available for reinvestment or shareholder return relative to what the income statement alone implies.
→StableQuality breakdown
- Expectation
- FCF as a percentage of net income rises toward 60% or above over the next 12 months as the gap between reported earnings and cash generation narrows.
CounterIf the FCF-to-net-income gap persists, the quality case resting on strong margins and ROE may overstate accessible cash; a premium multiple paired with weak cash conversion can be a persistent source of disappointment if the conversion rate remains depressed.
Per-dimension breakdown
Quality
8.8/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 10.0 |
| ROA | 10.0 |
| Gross margin | 8.4 |
| Op margin | 10.0 |
| Net margin | 10.0 |
| Current ratio | 8.5 |
| FCF quality | 3.0 |
| Moat | 9.0 |
| Piotroski F | 10.0 |
- ▸Excellent ROE: 36%
- ▸Strong margins: 47%
- ▸Earnings quality RED FLAG: 38% FCF/NI
- ▸Wide economic moat
Growth
10.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 10.0 |
| EPS growth | 10.0 |
- ▸Strong growth: 35% YoY
Momentum
7.2/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 1.5 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
7.3/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 6.5 |
| Analyst rating | 8.9 |
| Price target | 6.1 |
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.0 |
- ▸Negligible insider selling — $12,787,215 (0.001% of mkt cap)
Peer rank
6.0/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 8.3 |
| quality rank | 9.2 |
| growth rank | 6.4 |
- ▸Superior ROE vs peers
- ▸Best-in-class margins
Technical
5.7/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 3.6 |
| support resistance | 5.0 |
| 52w position | 8.5 |
Risk (lower is worse)
5.1/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 9.7 |
| days to cover | 8.7 |
| volatility | 0.7 |
| put call | 0.0 |
| implied vol | 1.1 |
| beta | 6.0 |
| debt equity | 9.3 |
| news risk | 5.0 |
- ▸Elevated put/call: 2.54
- ▸High IV: 73%
Catalyst
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 6.0 |
| dividend safety | 5.2 |
| news activity | 8.0 |
- ▸Perfect beat streak: 4Q
- ▸Dividend: 87.0%
How the verdict was assembled
Engine trigger
Fundamentals strong but target reached (-3.4% upside).
Engine technical detail
verdict_path:
L4:PATH_C2_GARP|V8:TARGET_REACHED|ENTRY_STICKY:WITHIN_BANDPassed (7)
- MOMENTUM:7.2>=5.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:22d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.3=NEGATIVE
Warning (0)
none
Reward-to-Risk
-0.35
Upside
-3.4%
Downside
9.5%
Sizing output
STARTER
SetupBREAKOUT — Golden cross, above all MAs, RSI 51, MACD bullish
EdgeCATALYST — Earnings in 22d with 4/4 beat streak
SuitabilityMODERATE — Balanced profile
Investment implication
The C-path quality+growth combination triggered the STRONG_BUY_WAIT verdict: quality 8.8 and growth 10.0 both clear their thresholds, with asymmetric R:R of -0.35 supporting the read.
The strongest dimensions are Growth at 10.0, Quality at 8.8, and Sentiment at 7.3; the weakest are Insider at 5.0, Risk (lower is worse) at 5.1, and Technical at 5.7. The V9 engine flagged 1 failed gate, producing an asymmetric reward-to-risk of -0.35 and an engine sizing output of STARTER.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1The company sustains a wide economic moat backed by net margins of 47%, ROE of 36%, and a near-perfect Piotroski F-Score of 9 out of 9, placing it in the top tier of its peer group for both return quality and balance-sheet strength. Peer comparisons identify both ROE and margins as best-in-class, supporting a durable quality premium over the long cycle.
Trip ifNet margin compresses below 42% from current 47% for 2 consecutive quarters.
- P2Revenue is expanding at 35% year-over-year, a rate the data identifies as the highest-scoring dimension in the overall assessment, sustaining a growth trajectory well above most peers in the covered universe.
Trip ifRevenue growth falls below 20% YoY for 2 consecutive quarters.
- P3The company has beaten consensus earnings estimates in each of the four most recent quarters, with an average positive surprise of approximately 7%, demonstrating consistent delivery above expectations across varied conditions.
Trip ifEPS surprise falls below 0% for 2 consecutive quarters.
- P4Free cash flow converts at only 38% of net income — a level the data flags as a quality red flag — limiting the realized cash available for reinvestment or shareholder return relative to what the income statement alone implies.
Trip ifFCF as a percentage of net income rises above 60% for 2 consecutive quarters.