Analyzing Veeco Instruments (VECO) & Taiwan Semiconductor Mfg. (TSM)

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

Dividends

Taiwan Semiconductor Mfg. pays an annual dividend of $0.92 per share and has a dividend yield of 2.2%. Veeco Instruments does not pay a dividend. Taiwan Semiconductor Mfg. pays out 41.1% of its earnings in the form of a dividend. Taiwan Semiconductor Mfg. has increased its dividend for 3 consecutive years.

Volatility & Risk

Taiwan Semiconductor Mfg. has a beta of 0.74, meaning that its share price is 26% less volatile than the S&P 500. Comparatively, Veeco Instruments has a beta of 0.73, meaning that its share price is 27% less volatile than the S&P 500.

Insider and Institutional Ownership

19.4% of Taiwan Semiconductor Mfg. shares are owned by institutional investors. Comparatively, 98.6% of Veeco Instruments shares are owned by institutional investors. 1.1% of Taiwan Semiconductor Mfg. shares are owned by insiders. Comparatively, 2.9% of Veeco Instruments shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

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

Net Margins Return on Equity Return on Assets
Taiwan Semiconductor Mfg. 35.71% 24.48% 17.90%
Veeco Instruments -10.16% -0.73% -0.47%

Analyst Recommendations

This is a summary of current recommendations and price targets for Taiwan Semiconductor Mfg. and Veeco Instruments, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Taiwan Semiconductor Mfg. 0 4 2 0 2.33
Veeco Instruments 0 2 5 0 2.71

Taiwan Semiconductor Mfg. currently has a consensus price target of $27.00, suggesting a potential downside of 34.45%. Veeco Instruments has a consensus price target of $29.14, suggesting a potential upside of 81.58%. Given Veeco Instruments’ stronger consensus rating and higher probable upside, analysts clearly believe Veeco Instruments is more favorable than Taiwan Semiconductor Mfg..

Earnings & Valuation

This table compares Taiwan Semiconductor Mfg. and Veeco Instruments’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Taiwan Semiconductor Mfg. $29.43 billion 7.26 $10.24 billion $2.24 18.39
Veeco Instruments $332.45 million 2.33 -$122.21 million ($1.00) -16.05

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

Summary

Taiwan Semiconductor Mfg. beats Veeco Instruments on 11 of the 17 factors compared between the two stocks.

About Taiwan Semiconductor Mfg.

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.

About Veeco Instruments

Veeco Instruments Inc. is engaged in the design, development, manufacture and support of thin film process equipment, primarily sold to make electronic devices. The Company’s geographical segments include the United States; China; Europe, Middle East and Africa (EMEA), and Rest of World (ROW). The Company’s portfolio of technology solutions focus on market areas, including Lighting, Display & Power Electronics; Advanced Packaging, micro-electromechanical systems (MEMS) & radio frequency (RF); Scientific & Industrial, and Data Storage. The Company’s equipment is used to make electronic devices, including light emitting diodes (LEDs), MEMS, wireless devices, power electronics, hard disk drives (HDDs) and semiconductor devices. The Company’s System products include Metal Organic Chemical Vapor Deposition Systems, Precision Surface Processing Systems, Ion Beam Etch and Deposition Systems, Molecular Beam Epitaxy Systems, and Other Deposition and Industrial Products.

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