TSM Scores High in Warren Buffett's Strategy Model

TSM shines in a recent analysis, scoring 93% on the Patient Investor model. This offers investors confidence in its profitability and valuation metrics, indicating firm health and potential positive stock movement.

Date: 18-03-2025

AI Rating: 8

TAIWAN SEMICONDUCTOR MFG. CO. LTD. Analysis
The report highlights TSM's performance based on various financial metrics aligned with Warren Buffett's investment principles. Notably, the company has been rated with key positive indicators across all essential tests in the Patient Investor strategy.

Key Positive Metrics
1. **Earnings Predictability**: The firm’s ability to predict earnings is classified as a 'PASS', indicating stability in its earnings projections.
2. **Debt Service**: TSM passes the debt service criterion, suggesting that it can handle its debt obligations effectively, which is crucial for financial health.
3. **Return on Equity (ROE)**: Rated as a 'PASS', it signifies TSM's capability to generate profits from its equity, which is a strong positive indicator for investors.
4. **Free Cash Flow (FCF)**: The report states a 'PASS', indicating TSM generates significant free cash flow, useful for reinvestments or returns to shareholders.
5. **Return on Total Capital**: This also marked a 'PASS', underscoring efficient capital utilization for profitability.
6. **Use of Retained Earnings**: The company's positive score here indicates it is responsibly reinvesting its earnings to foster growth.
7. **Share Repurchase**: TSM’s ability to repurchase shares reflects confidence in its stock value.
8. **Initial Rate of Return and Expected Return**: Both passing signifies anticipated future growth and returns are promising. This comprehensive performance may lead to positive movements in stock prices as it reflects a well-managed and potentially lucrative company.

Stocks: TSM