TSMC (TSM) is one of the most trending stocks among Zacks.com visitors these days. Therefore, we recommend considering several factors that can affect a stock’s short-term performance.
Over the past month, the semiconductor company’s stock has increased by -8.4%. In comparison, the Zacks S&P 500 composite index changed +1.6%. During this period, the Zacks Semiconductor Circuit Foundry industry, which includes TSMC, declined 1.9%. The key question here is: What is the future direction of the stock price?
While media releases and rumors about significant changes in a company’s business prospects typically cause its stock to “trend” and lead to immediate price movements, there are some fundamentals that ultimately govern buy-and-hold decisions. There are always facts.
Zacks prioritizes evaluating changes in a company’s future earnings expectations above all else. That’s because we believe that the present value of future income streams determines the fair value of a stock.
Essentially, we look at how the sell-side analysts covering a stock are revising their earnings estimates to reflect the impact of the latest business trends. And as a company’s earnings expectations rise, so will the fair value of its stock. If the fair value is higher than the current market price, investors will be more willing to buy the stock, causing the price to rise. This is why empirical research shows a strong correlation between trends in earnings estimate revisions and short-term stock price movements.
For the current quarter, TSMC is expected to post earnings of $2.01 per share, which would represent a year-over-year change of +39.6%. The Zacks Consensus Estimate has changed +7.2% over the past 30 days.
The consensus earnings estimate for the current fiscal year of $6.73 represents a +29.9% change from the prior year. Over the past 30 days, this estimate has changed by +4.2%.
Next year’s consensus earnings estimate of $8.63 represents a +28.3% change from what TSMC was expected to report a year ago. Over the past month, the forecast has changed by +4.1%.
The Zacks Rank, a proprietary stock evaluation tool with an impressive, outside-audited track record of impressive results, leverages the power of earnings estimate revisions to be a more conclusive indicator of a stock’s short-term price performance. . The magnitude of the recent consensus estimate change, along with three other factors related to the earnings estimate, has led to TSMC’s Zacks Rank #1 (Strong Buy).
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The chart below shows the company’s consensus EPS estimate over the next 12 months over time.
Earnings growth is arguably the best indicator of a company’s financial health, but nothing will happen if a company can’t grow its revenue. After all, it’s nearly impossible for a company to increase profits over a long period of time without increasing revenue. Therefore, it’s important to know a company’s earnings growth potential.
For TSMC, the consensus revenue estimate for the current quarter is $25.96 Billion, representing a year-over-year change of +32.3%. Estimates for the current and next fiscal year are $87.14 billion and $107.93 billion, representing changes of +25.8% and +23.9%, respectively.
TSMC reported revenue of $23.5 billion in its last reported quarter. This represents a +36% year-over-year change. EPS for the same period was $1.94, compared to $1.29 a year ago.
The reported earnings represent a surprise of +3.47% when compared to the Zacks Consensus Estimate of $22.72 billion. EPS surprise was +11.49%.
The company beat consensus EPS estimates in each of the trailing four quarters. The company has surpassed consensus revenue estimates every time during this period.
You cannot make efficient investment decisions without considering stock valuation. To predict a stock’s future price performance, it is important to determine whether the current price accurately reflects the intrinsic value of the underlying business and the company’s growth prospects.
Compare the current value of a company’s valuation multiples, such as price to earnings (P/E), price to sales (P/S), and price to cash flow (P/CF), to its own value, while also Value helps determine whether a stock is fairly valued, overvalued, or undervalued, and by comparing a company to its peers based on these parameters, you can determine whether a stock is reasonably priced. I can understand the gender.
The Zacks Value Style Score (part of the Zacks Style Scores system) pays close attention to both traditional and non-traditional valuation metrics and rates stocks from A to F, where A is better than B. , B is better than C, A is better than B, and B is better than C). ), can be very helpful in identifying whether a stock is overvalued, properly valued, or temporarily undervalued.
TSMC is rated C on this score, indicating that it trades on par with its peers. Click here to see the values of some of the metrics that determined this grade.
The facts discussed here, and much of the other information on Zacks.com, may help you decide whether the market buzz surrounding TSMC is worth paying attention to. However, the company’s Zacks Rank #1 suggests it has the potential to outperform the broader market in the near term.
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Taiwan Semiconductor Manufacturing Co., Ltd. (TSM): Free Stock Analysis Report
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