Tower Semiconductor Ltd. Fundamental Analysis (NASDAQ: TSEM)
Tower Semiconductor Ltd. (NASDAQ: TSEM) shows weak financial fundamentals with a PE ratio of 87.60, profit margin of 16.94%, and ROE of 9.82%. The company generates $1.7B in annual revenue with moderate year-over-year growth of 9.05%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 65.2/100 based on profitability, valuation, growth, and balance sheet metrics. The C+ grade reflects average fundamentals, with notable risks in certain areas.
Fundamental Health Score
We analyze TSEM's fundamental strength across five key dimensions:
Efficiency Score
WeakTSEM struggles to generate sufficient returns from assets.
Valuation Score
ModerateTSEM shows balanced valuation metrics.
Growth Score
ModerateTSEM shows steady but slowing expansion.
Financial Health Score
ExcellentTSEM maintains a strong and stable balance sheet.
Profitability Score
ModerateTSEM maintains healthy but balanced margins.
Key Financial Metrics
Is TSEM Expensive or Cheap?
P/E Ratio
TSEM trades at 87.60 times earnings. This suggests a premium valuation.
PEG Ratio
When adjusting for growth, TSEM's PEG of 1.95 indicates fair valuation.
Price to Book
The market values Tower Semiconductor Ltd. at 8.17 times its book value. This suggests the stock is fully valued or overvalued on an asset basis.
EV/EBITDA
Enterprise value stands at 40.38 times EBITDA. This signals the market has high growth expectations.
How Well Does TSEM Make Money?
Net Profit Margin
For every $100 in sales, Tower Semiconductor Ltd. keeps $16.94 as profit after all expenses.
Operating Margin
Core operations generate 16.16 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $9.82 in profit for every $100 of shareholder equity.
ROA
Tower Semiconductor Ltd. generates $7.68 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
Tower Semiconductor Ltd. generates strong operating cash flow of $872.95M, reflecting robust business health.
Free Cash Flow
Tower Semiconductor Ltd. generates strong free cash flow of $304.35M, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $2.70 in free cash annually.
FCF Yield
TSEM converts 1.21% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
87.60
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
1.95
vs 25 benchmark
P/B Ratio
Price to book value ratio
8.17
vs 25 benchmark
P/S Ratio
Price to sales ratio
14.74
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
0.05
vs 25 benchmark
Current Ratio
Current assets to current liabilities
4.91
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.10
vs 25 benchmark
ROA
Return on assets percentage
0.08
vs 25 benchmark
ROCE
Return on capital employed
0.08
vs 25 benchmark
How TSEM Stacks Against Its Sector Peers
| Metric | TSEM Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 87.60 | 34.40 | Worse (Expensive) |
| ROE | 9.82% | 730.00% | Weak |
| Net Margin | 16.94% | -3112.00% (disorted) | Strong |
| Debt/Equity | 0.05 | 0.22 | Strong (Low Leverage) |
| Current Ratio | 4.91 | 6.05 | Strong Liquidity |
| ROA | 7.68% | 256.00% | Weak |
TSEM outperforms its industry in 3 out of 6 key metrics, particularly excelling in Net Margin, but lagging in P/E Ratio.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews Tower Semiconductor Ltd.'s 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
18.51%
Industry Style: Growth, Innovation, High Beta
High GrowthEPS CAGR
156.57%
Industry Style: Growth, Innovation, High Beta
High GrowthFCF CAGR
36.96%
Industry Style: Growth, Innovation, High Beta
High Growth