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

Profitability

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

Net Margins Return on Equity Return on Assets
Taiwan Semiconductor Mfg. 35.08% 24.18% 17.75%
Lattice Semiconductor -17.49% 4.39% 1.57%

Volatility and Risk

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

Insider and Institutional Ownership

19.5% of Taiwan Semiconductor Mfg. shares are owned by institutional investors. Comparatively, 84.7% of Lattice Semiconductor shares are owned by institutional investors. 1.1% of Taiwan Semiconductor Mfg. shares are owned by insiders. Comparatively, 2.8% of Lattice Semiconductor shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Earnings & Valuation

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Taiwan Semiconductor Mfg. $32.11 billion 6.87 $11.27 billion $2.26 18.82
Lattice Semiconductor $427.05 million 1.74 -$54.09 million ($0.59) -10.19

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.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Taiwan Semiconductor Mfg. and Lattice Semiconductor, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Taiwan Semiconductor Mfg. 0 4 4 0 2.50
Lattice Semiconductor 0 2 1 0 2.33

Taiwan Semiconductor Mfg. currently has a consensus price target of $27.00, suggesting a potential downside of 36.52%. Lattice Semiconductor has a consensus price target of $7.00, suggesting a potential upside of 16.47%. Given Lattice Semiconductor’s higher probable upside, analysts clearly believe Lattice Semiconductor is more favorable than Taiwan Semiconductor Mfg..

Dividends

Taiwan Semiconductor Mfg. pays an annual dividend of $0.92 per share and has a dividend yield of 2.2%. Lattice Semiconductor does not pay a dividend. Taiwan Semiconductor Mfg. pays out 40.7% of its earnings in the form of a dividend. Lattice Semiconductor has increased its dividend for 3 consecutive years.

Summary

Taiwan Semiconductor Mfg. beats Lattice Semiconductor 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 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.

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