Taiwan Semiconductor Manufacturing (NYSE: TSM) and Inphi Corporation (NYSE:IPHI) are both computer and technology companies, but which is the superior stock? We will contrast the two companies based on the strength of their earnings, profitability, analyst recommendations, dividends, risk, valuation and institutional ownership.

Earnings and Valuation

This table compares Taiwan Semiconductor Manufacturing and Inphi Corporation’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Taiwan Semiconductor Manufacturing $32.16 billion 6.17 $20.75 billion $2.16 17.70
Inphi Corporation $329.67 million 4.90 $70.48 million $1.59 24.04

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

Volatility and Risk

Taiwan Semiconductor Manufacturing has a beta of 0.76, suggesting that its stock price is 24% less volatile than the S&P 500. Comparatively, Inphi Corporation has a beta of 1.14, suggesting that its stock price is 14% more volatile than the S&P 500.

Analyst Recommendations

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

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Taiwan Semiconductor Manufacturing 0 3 1 0 2.25
Inphi Corporation 0 1 10 1 3.00

Taiwan Semiconductor Manufacturing presently has a consensus price target of $27.50, suggesting a potential downside of 28.09%. Inphi Corporation has a consensus price target of $44.13, suggesting a potential upside of 15.42%. Given Inphi Corporation’s stronger consensus rating and higher possible upside, analysts plainly believe Inphi Corporation is more favorable than Taiwan Semiconductor Manufacturing.

Profitability

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

Net Margins Return on Equity Return on Assets
Taiwan Semiconductor Manufacturing 36.11% 25.61% 18.51%
Inphi Corporation 21.98% 9.77% 4.61%

Dividends

Taiwan Semiconductor Manufacturing pays an annual dividend of $0.92 per share and has a dividend yield of 2.4%. Inphi Corporation does not pay a dividend. Taiwan Semiconductor Manufacturing pays out 42.6% of its earnings in the form of a dividend. Inphi Corporation has raised its dividend for 2 consecutive years.

Insider and Institutional Ownership

19.4% of Taiwan Semiconductor Manufacturing shares are owned by institutional investors. 1.1% of Taiwan Semiconductor Manufacturing shares are owned by company insiders. Comparatively, 4.2% of Inphi Corporation shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

About Taiwan Semiconductor Manufacturing

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 Inphi Corporation

Inphi Corporation is a provider of analog and mixed signal semiconductor solutions for the communications and datacenter markets. The Company’s solutions provide an interface between analog signals and digital information in systems, such as telecommunications transport systems, enterprise networking equipment and datacenters. It is engaged in the design, development and sale of analog connectivity components that operate to maintain, amplify and manage signal integrity at high speeds in a range of applications. Its semiconductor solutions are designed to address bandwidth bottlenecks in networks and enable the rollout of communications and datacenter infrastructures. The Company provides 25 gigabit (G) to 600G high-speed analog semiconductor solutions for the communications market. As of December 31, 2016, the Company’s product portfolio included products that had commercially shipped, products for which the Company had shipped engineering samples and products under development.

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