How Much is Taiwan Semiconductor Stock Really Worth? | TSM Stock Prediction | TSM Stock Analysis

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TSMC의 DCF 분석 영상. 주가 약 196달러, 시총 1조 달러 부근, FCF 22.34%, 향후 5년 EPS 성장률 21.5% 가정, 이후 10.75%로 감속, 장기 성장률 5%, WACC 13.78%. 내재가치는 주당 약 124달러로 현재가보다 낮아 고평가로 제시. 다만 채널 운영자는 Buy 등급을 유지하며 DCF는 여러 도구 중 하나라고 설명. 단기 가격 방향 예측 발언은 없음.

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01. Taiwan semiconductor stock is reaching record highs and gaining significant investor interest because of its position as a supplier to the artificial intelligence industry it's most popularly known as being one of the primary suppliers to Apple for the iPhone and Nvidia for its gpus and other Technologies it's not surprising I should say that Taiwan semiconductor is gaining so much investor interest in this video I'm going to do a discounted cash flow valuation analysis of Taiwan semiconductor stock to answer how much I think the company is worth according to its intrinsic value using the discounted cash flow valuation method now this method uses many and several estimates and assumptions and to make the price Target prediction but and where if any I'm making adjustments so you could determine yourself if my calculation is on point too pessimistic or too optimistic so let's get started need is its current market price so that when I find the intrinsic value I can compare it with the market price to determine if it's undervalued Taiwan semiconductor currently trading at 100 96 per share near record highs as you can see the next number I need is the company's free cash flow for the most recent trailing 12 months which came in at 22.34% and also I need the share count which currently stands at 5186 billion shares outstanding and finally I need the current market capitalization which Taiwan semiconductor recently surpassed that elusive $1 trillion market capitalization Milestone all right I also need the company's beta which I'm getting from Yahoo finance here at 1.27 and finally to forecast growth in free cash flows I will be using the company's next 5-year estimate for earnings per share growth coming ey think this company will grow its earnings per share by 215% over the next 5 years all right so now that we've got all of the estimates assumptions and numbers that we need to make this valuation we can jump into my model here for Taiwan on semiconductors discounted cash flow valuation and this is as of October 28th 2024 so let me draw your attention first to the free cash flow forecast 22.34% growth rate that we got from y Finance from the their estimates for earnings per share growth after the first 5year period of these above 20% growth rates I'm going to have the company going through a transition period where it grows its earnings per share at half the rate it did in the first 5 years so I have it growing at 10.75% over the next 5 years and then in the long run I have the company's earnings per share growth settling down at the long-term growth rate of 5% so when I forecast these cash flows all the way out to 2035 and then that's not all we need to do here with these forecasted cash flows we need to discount them because these are cash flows that are owed to us entitled to us in the future but money in the future is not worth as much to us as money today so we need to Discount that the discount rate I'm going to use for Taiwan semiconduct conductor is 13.78% I arrive at this weighted average cost of capital using a cost of debt of 65% and a capital asset pricing model cost of equity at 14.16 utilizing that beta of 1.27 with a risk-free rate of 4% and a market risk premium I usually use a market risk premium of 6% but given that Taiwan semiconductor is in a a country outside of the United States and that country has increased geopolitical risk I'm adjusting upward the market risk premium here to 8% from 6% also you can see that the company's finan mostly through Equity it has only 29 billion in debt with a market cap of 1 trillion so I'm establishing a Target cost of capital weighted at uh waiting of capital at 95% equity and 5% % debt so when I discount those cash flows in the future back to today the present value of all of the cash flows between now and 2034 comes in at $279 billion now instead of forecasting all of these cash flows from today out to Infinity I can use a shortcut to take the cash flows expected from the year 2035 and onward and bring those back to the year 20 34 using the terminal value calculation method to use this method you take the free cash flow expected one year ahead expected growth rate and so when I utilize that calculation I get a terminal value of 1.179 trillion for Taiwan semiconductor but again I need to Discount this value back to today and when I do that I get the present value of the terminal value of 3 $24 billion summing up the PB of the terminal value with the PB of the cash flows we get a value of operations of $604 billion but we're not done yet to this total of the value of operations we need to add a company's cash balance and subtract the company's debt so when we add the 68 billion of cash and short-term Investments and we subtract the long-term debt of 29.6 billion we get a value of equity of 643 billion for Taiwan semiconductor but we want to know the price per share so we need to divide that value of equity by the number of shares outstanding which was 5186 billion and we get t $124 now that's significantly below the current trading price of $196 so the intrinsic value per share would suggest that the stock is overvalued that being said I hav October 17 and this goes to highlight that I don't only use one valuation method to come to a conclusion on an investment the discounted cash flow valuation model is just one of the tools that I use to come to a conclusion on an investment where or not it's a buy hold or a sell sometimes all of the calculation methods point to the same conclusion and sometimes the different valuation methods point to different conclusions and so as an analyst I'm forced to use judgment in Waiting these different valuation methods and how to evaluate each one to come to a conclusion on a stock but just using the intrinsic valuation method I come to $124