Critical Analysis: Lattice Semiconductor (LSCC) vs. Taiwan Semiconductor Mfg. (TSM)

Lattice Semiconductor (NASDAQ: LSCC) and Taiwan Semiconductor Mfg. (NYSE:TSM) are both computer and technology companies, but which is the better stock? We will compare the two companies based on the strength of their earnings, risk, valuation, profitability, institutional ownership, dividends and analyst recommendations.

Analyst Ratings

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

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Lattice Semiconductor 0 2 1 0 2.33
Taiwan Semiconductor Mfg. 0 5 4 0 2.44

Lattice Semiconductor currently has a consensus target price of $7.00, suggesting a potential upside of 27.04%. Taiwan Semiconductor Mfg. has a consensus target price of $34.50, suggesting a potential downside of 20.65%. Given Lattice Semiconductor’s higher probable upside, equities research analysts clearly believe Lattice Semiconductor is more favorable than Taiwan Semiconductor Mfg..

Profitability

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

Net Margins Return on Equity Return on Assets
Lattice Semiconductor -18.28% 0.48% 0.17%
Taiwan Semiconductor Mfg. 35.08% 24.18% 17.75%

Earnings and Valuation

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Lattice Semiconductor $385.96 million 1.76 -$54.09 million ($0.58) -9.50
Taiwan Semiconductor Mfg. $32.11 billion 7.02 $11.27 billion $2.29 18.99

Taiwan Semiconductor Mfg. has higher revenue and earnings than Lattice Semiconductor. Lattice Semiconductor 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.

Risk & Volatility

Lattice Semiconductor has a beta of 1.58, meaning that its stock price is 58% more volatile than the S&P 500. Comparatively, Taiwan Semiconductor Mfg. has a beta of 0.85, meaning that its stock price is 15% less volatile than the S&P 500.

Dividends

Taiwan Semiconductor Mfg. pays an annual dividend of $0.92 per share and has a dividend yield of 2.1%. Lattice Semiconductor does not pay a dividend. Taiwan Semiconductor Mfg. pays out 40.2% of its earnings in the form of a dividend. Taiwan Semiconductor Mfg. has raised its dividend for 3 consecutive years.

Institutional and Insider Ownership

84.7% of Lattice Semiconductor shares are owned by institutional investors. Comparatively, 19.5% of Taiwan Semiconductor Mfg. shares are owned by institutional investors. 2.8% of Lattice Semiconductor shares are owned by company insiders. Comparatively, 1.1% of Taiwan Semiconductor Mfg. shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Summary

Taiwan Semiconductor Mfg. beats Lattice Semiconductor on 12 of the 17 factors compared between the two stocks.

About Lattice Semiconductor

Lattice Semiconductor Corporation is a United States-based company, which develops semiconductor technologies that it monetizes through products, solutions and licenses. The Company operates through two segments: the core Lattice (Core) business, which includes intellectual property (IP) and semiconductor devices, and Qterics, a discrete software-as-a-service business unit in the Lattice legal entity structure. The Company is a provider of customizable smart connectivity solutions based on its low power field programmable gate array (FPGA), video application specific standard product (ASSP), 60 gigahertz millimeter wave, and IP products to the consumer, communications, industrial, computing and automotive markets across the world. Its products include iCE40 Ultra/UltraLite, iCE40 LP/HX/LM, MachXO3, MachXO2, MachXO, HDMI Transmitters, HDMI Receivers, USB Type-C Port Controllers, Port Processors, Analog to HDMI/MHL Converters, MHL Transmitters, UltraGig 6400 and 802.11ad Chipsets.

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.

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