Analog Devices (ADI) & Taiwan Semiconductor Mfg. (TSM) Head-To-Head Analysis

Analog Devices (NASDAQ:ADI) and Taiwan Semiconductor Mfg. (NYSE:TSM) are both large-cap computer and technology companies, but which is the better business? We will contrast the two companies based on the strength of their earnings, risk, analyst recommendations, dividends, institutional ownership, valuation and profitability.

Dividends

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Analog Devices pays an annual dividend of $1.92 per share and has a dividend yield of 1.8%. Taiwan Semiconductor Mfg. pays an annual dividend of $1.04 per share and has a dividend yield of 2.7%. Analog Devices pays out 32.3% of its earnings in the form of a dividend. Taiwan Semiconductor Mfg. pays out 46.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Analog Devices has increased its dividend for 9 consecutive years and Taiwan Semiconductor Mfg. has increased its dividend for 4 consecutive years.

Institutional and Insider Ownership

90.1% of Analog Devices shares are owned by institutional investors. Comparatively, 19.2% of Taiwan Semiconductor Mfg. shares are owned by institutional investors. 0.5% of Analog Devices 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 large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Analog Devices	25.42%	19.99%	10.52%
Taiwan Semiconductor Mfg.	34.04%	22.33%	17.18%

Risk & Volatility

Analog Devices has a beta of 1.24, meaning that its stock price is 24% more volatile than the S&P 500. Comparatively, Taiwan Semiconductor Mfg. has a beta of 0.97, meaning that its stock price is 3% less volatile than the S&P 500.

Analyst Ratings

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Analog Devices	1	9	12	0	2.50
Taiwan Semiconductor Mfg.	1	1	3	0	2.40

Analog Devices presently has a consensus price target of $102.85, indicating a potential downside of 3.69%. Given Analog Devices’ stronger consensus rating and higher possible upside, research analysts clearly believe Analog Devices is more favorable than Taiwan Semiconductor Mfg..

Valuation and Earnings

This table compares Analog Devices and Taiwan Semiconductor Mfg.’s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Analog Devices	$6.20 billion	6.34	$1.50 billion	$5.94	17.98
Taiwan Semiconductor Mfg.	$34.20 billion	5.88	$11.64 billion	$2.24	17.32

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

Summary

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

Analog Devices Company Profile

Analog Devices, Inc. engages in the design, development, manufacture, and marketing of integrated circuits (ICs). Its products include industrial process control systems, medical imaging equipment, factory process automation systems, patient vital signs monitoring devices, instrumentation and measurement systems, wireless infrastructure equipment, energy management systems, networking equipment, aerospace and defense electronics, optical systems, automobiles, and portable consumer devices. The company was founded by Raymond P. Stata and Matthew Lorber in 1965 and is headquartered in Norwood, MA.

Taiwan Semiconductor Mfg. Company Profile

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.