Taiwan Semiconductor Manufacturing (NYSE:TSM) & Cohu (NASDAQ:COHU) Head-To-Head Analysis

Taiwan Semiconductor Manufacturing (NYSE:TSM) and Cohu (NASDAQ:COHU) are both technology companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, valuation, analyst recommendations, institutional ownership, earnings, dividends and profitability.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Taiwan Semiconductor Manufacturing	50.31%	39.25%	26.90%
Cohu	-7.43%	-1.96%	-1.30%

Dividends

Taiwan Semiconductor Manufacturing pays an annual dividend of $3.43 per share and has a dividend yield of 0.7%. Cohu pays an annual dividend of $0.24 per share and has a dividend yield of 0.3%. Taiwan Semiconductor Manufacturing pays out 24.7% of its earnings in the form of a dividend. Cohu pays out -28.9% 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.

Valuation and Earnings

This table compares Taiwan Semiconductor Manufacturing and Cohu”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Taiwan Semiconductor Manufacturing	$4,440.49 billion	0.56	$54.12 billion	$13.86	34.82
Cohu	$522.60 million	6.62	-$74.27 million	($0.83)	-88.07

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

Analyst Ratings

This is a summary of current ratings and recommmendations for Taiwan Semiconductor Manufacturing and Cohu, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Taiwan Semiconductor Manufacturing	0	1	13	3	3.12
Cohu	1	1	7	1	2.80

Taiwan Semiconductor Manufacturing presently has a consensus price target of $524.89, indicating a potential upside of 8.76%. Cohu has a consensus price target of $68.75, indicating a potential downside of 5.95%. Given Taiwan Semiconductor Manufacturing’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Taiwan Semiconductor Manufacturing is more favorable than Cohu.

Risk and Volatility

Taiwan Semiconductor Manufacturing has a beta of 1.37, indicating that its share price is 37% more volatile than the S&P 500. Comparatively, Cohu has a beta of 1.51, indicating that its share price is 51% more volatile than the S&P 500.

Institutional & Insider Ownership

16.5% of Taiwan Semiconductor Manufacturing shares are held by institutional investors. Comparatively, 94.7% of Cohu shares are held by institutional investors. 1.1% of Taiwan Semiconductor Manufacturing shares are held by insiders. Comparatively, 3.0% of Cohu shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Summary

Taiwan Semiconductor Manufacturing beats Cohu on 12 of the 17 factors compared between the two stocks.

About Taiwan Semiconductor Manufacturing

Taiwan Semiconductor Manufacturing Company Limited, together with its subsidiaries, manufactures, packages, tests, and sells integrated circuits and other semiconductor devices in Taiwan, China, Europe, the Middle East, Africa, Japan, the United States, and internationally. It provides a range of wafer fabrication processes, including processes to manufacture complementary metal- oxide-semiconductor (CMOS) logic, mixed-signal, radio frequency, embedded memory, bipolar CMOS mixed-signal, and others. The company also offers customer and engineering support services; manufactures masks; and invests in technology start-up companies; researches, designs, develops, manufactures, packages, tests, and sells color filters; and provides investment services. Its products are used in high performance computing, smartphones, Internet of things, automotive, and digital consumer electronics. The company was incorporated in 1987 and is headquartered in Hsinchu City, Taiwan.

About Cohu

Cohu, Inc., through its subsidiaries, provides semiconductor test equipment and services in China, the United States, Taiwan, Malaysia, the Philippines, and internationally. The company supplies semiconductor test and inspection handlers, micro-electromechanical system (MEMS) test modules, test contactors, thermal sub-systems, and semiconductor automated test equipment for semiconductor manufacturers and test subcontractors. It also provides semiconductor automated test equipment for wafer level and device package testing; various test handlers, including pick-and-place, turret, gravity, strip, and MEMS and thermal sub-systems; interface products comprising test contactors, and probe heads and pins; spares and kits; various parts and labor warranties on test and handling systems, and instruments; and training on the maintenance and operation of its systems, as well as application, data management software, and consulting services on its products. In addition, the company offers data analytics product that includes DI-Core, a software suite used to optimize Cohu equipment performance, which provides real-time online performance monitoring and process control. It markets its products through direct sales force and independent sales representatives. The company was formerly known as Cohu Electronics, Inc. and changed its name to Cohu, Inc. in 1972. The company was incorporated in 1947 and is headquartered in Poway, California.