Head-To-Head Contrast: Taiwan Semiconductor Mfg. (TSM) & Nlight (LASR)

Taiwan Semiconductor Mfg. (NYSE:TSM) and Nlight (NASDAQ:LASR) are both computer and technology companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, risk, dividends, analyst recommendations, profitability, earnings and valuation.

Insider and Institutional Ownership

19.4% of Taiwan Semiconductor Mfg. shares are held by institutional investors. Comparatively, 75.8% of Nlight shares are held by institutional investors. 1.1% of Taiwan Semiconductor Mfg. shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares Taiwan Semiconductor Mfg. and Nlight’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Taiwan Semiconductor Mfg. $34.20 billion 6.52 $11.66 billion $2.24 19.20
Nlight $191.36 million 4.70 $13.94 million $0.32 76.50

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

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Taiwan Semiconductor Mfg. and Nlight, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Taiwan Semiconductor Mfg. 1 1 3 0 2.40
Nlight 1 4 4 1 2.50

Nlight has a consensus target price of $29.22, suggesting a potential upside of 19.37%. Given Nlight’s stronger consensus rating and higher possible upside, analysts plainly believe Nlight is more favorable than Taiwan Semiconductor Mfg..

Profitability

This table compares Taiwan Semiconductor Mfg. and Nlight’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Taiwan Semiconductor Mfg. 34.04% 21.96% 17.08%
Nlight 7.28% 8.37% 6.55%

Dividends

Taiwan Semiconductor Mfg. pays an annual dividend of $1.04 per share and has a dividend yield of 2.4%. Nlight does not pay a dividend. Taiwan Semiconductor Mfg. pays out 46.4% of its earnings in the form of a dividend. Taiwan Semiconductor Mfg. has increased its dividend for 4 consecutive years.

Summary

Taiwan Semiconductor Mfg. beats Nlight on 10 of the 17 factors compared between the two stocks.

About Taiwan Semiconductor Mfg.

Taiwan Semiconductor Manufacturing Company Limited, together with its subsidiaries, engages in manufacturing, selling, packaging, testing, and computer-aided design of integrated circuits and other semiconductor devices. The company manufactures masks and electronic spare parts; researches, develops, designs, manufactures, sells, packages, and tests color filters; and offers customer and engineering support services. It is also involved in investing activities. The company operates in Taiwan, the United States, Asia, Europe, the Middle East, Africa, and internationally. Taiwan Semiconductor Manufacturing Company Limited was founded in 1987 and is headquartered in HsinChu, Taiwan.

About Nlight

nLIGHT, Inc. designs, develops, and manufactures semiconductor and fiber lasers used in the industrial, microfabrication, and aerospace and defense markets. The company also produces optical fiber products. It markets and sells its products to original equipment manufacturer primarily through direct sales force in the United States, China, South Korea, Germany, and Finland, as well as through various independent sales representatives and distributors in Asia and Europe. The company was formerly known as nLight Photonics Corporation and changed its name to nLIGHT, Inc. in January 2016. nLIGHT, Inc. was founded in 2000 and is headquartered in Vancouver, Washington.

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