Is TSM a high-quality business?

AlphaMadera's AlphaQuality grade scores Taiwan Semiconductor Manufacturing Company Limited on six pillars — profitability, capital efficiency, balance-sheet strength, growth durability, cash generation, and shareholder yield. The composite letter grade reflects how TSM compares to a Buffett-style quality bar.

What is Taiwan Semiconductor Manufacturing Company Limited's AlphaQuality grade?

AlphaQuality assigns a letter grade (A through F) to TSM based on a six-pillar quantitative model. The live page shows the composite grade plus each pillar's individual score with the underlying metrics.

What makes TSM a quality stock?

AlphaQuality looks at return on capital, free-cash-flow margins, debt-to-equity, revenue stability, dividend and buyback policy, and operating-margin trend. Stocks scoring well across all six pillars earn higher grades — the methodology favors compounders over cyclicals.

TSM - Taiwan Semiconductor Manufacturing Company Limited

Price: -- -- | CONSENSUS: Buy DETAILS | PRICE TARGET: $427.50 DETAILS

AlphaQuality

Quantitative six-pillar business-quality grade

Platform & Compounding FCF

AlphaQuality — archetype-weighted quantitative grade

A- 85.3 / 100 composite

Composite Grade

Composite of six pillars weighted for platform & compounding fcf businesses. Purely quantitative — no stock price or analyst input.

Profitability

Weight: 25%

A- 86.2

5yr Avg ROIC 16.2% 83/100
Operating Margin Trend +1.59 pp/yr 94/100

Capital Efficiency

Weight: 15%

A- 82.4

5yr Avg ROE 19.9% 92/100
5yr Share-Count CAGR 0.0% 65/100

Growth Quality

Weight: 25%

A+ 96.0

5yr Revenue CAGR 24.8% 100/100
5yr EPS CAGR 30.8% 100/100
Revenue-Growth Years (5) 4/5 80/100

Cash Generation

Weight: 20%

B 73.2

5yr FCF Margin 22.3% 92/100
5yr FCF/NI Conversion 0.54x 50/100

Balance Sheet

Weight: 10%

A+ 99.4

Net Debt / EBITDA -0.75x 99/100
Interest Coverage (EBIT/Int) 30.00x 100/100
Altman Z-Score 17.15 100/100

Stability

Weight: 5%

C+ 57.5

EPS Volatility (σ/μ) 0.67 17/100
Piotroski F-Score 9 100/100
Negative-Revenue Years (5) 1/5 80/100

11 of 11 gurus held; 1 new buy; 4 added; 6 trimmed; 1 full exit.

Holders: 11
Avg Δ position: -9.6%
New buys: 1
Full exits: 1

Dalio new
Laffont sold -100%
Wood decreased -75%

How this is calculated

AlphaQuality grades six pillars from 0-100 and weights each by archetype:

Profitability (25%) — 5yr Avg ROIC, Operating Margin Trend
Capital Efficiency (15%) — 5yr Avg ROE, 5yr Share-Count CAGR
Growth Quality (25%) — 5yr Revenue CAGR, 5yr EPS CAGR, Revenue-Growth Years (5)
Cash Generation (20%) — 5yr FCF Margin, 5yr FCF/NI Conversion
Balance Sheet (10%) — Net Debt / EBITDA, Interest Coverage (EBIT/Int), Altman Z-Score
Stability (5%) — EPS Volatility (σ/μ), Piotroski F-Score, Negative-Revenue Years (5)

We deliberately ignore stock price, analyst targets, and consensus ratings so the grade is suitable for backtesting forward returns. A minimum of 5 fiscal years of audited statements is required; distressed and highly leveraged infrastructure businesses are declared ungradable rather than forced into a numeric score.