Taiwan Semiconductor Just Reclaimed a $2 Trillion Market Cap. It Still Trades at About 20 Times Forward Earnings.
The chip foundry giant is back at a milestone valuation with a market-average multiple attached. That combination deserves a closer look.
Overview
Taiwan Semiconductor Manufacturing (NYSE: TSM) got back above one of the market's biggest round numbers on Thursday, July 30. A 7.6% jump in the shares carried the chip foundry giant's market cap through the $2 trillion mark again, to about $2.1 trillion, where it stood at Friday's close.
The company had surrendered that level during the stock's slide from its 52-week high of $479 -- a drop that, at its worst, erased roughly a fifth of the company's value even as its results kept improving. As recently as the middle of last week, the market cap sat around $1.9 trillion.
Details
Milestone valuations usually come attached to milestone-sized expectations. This one doesn't. At about $403 per U.S.-listed share, the stock trades at about 28 times earnings and about 20 times forward earnings estimates -- roughly what investors pay for an average large company. I'd argue that combination of an ordinary multiple and an extraordinary business is the story worth examining here.
Source
Originally published at www.fool.com.