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TSMC (TSM) Gains But Lags Market: What You Should Know

Zacks Equity Research
·3 mins read

In the latest trading session, TSMC (TSM) closed at $81.07, marking a +0.7% move from the previous day. The stock lagged the S&P 500's daily gain of 0.83%. Elsewhere, the Dow gained 1.2%, while the tech-heavy Nasdaq added 0.74%.

Prior to today's trading, shares of the chip company had lost 1.28% over the past month. This has was narrower than the Computer and Technology sector's loss of 5.53% and the S&P 500's loss of 4.83% in that time.

Investors will be hoping for strength from TSM as it approaches its next earnings release. The company is expected to report EPS of $0.81, up 30.65% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $11.45 billion, up 21.84% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $3.14 per share and revenue of $43.59 billion, which would represent changes of +46.05% and +25.86%, respectively, from the prior year.

Investors might also notice recent changes to analyst estimates for TSM. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. TSM is holding a Zacks Rank of #3 (Hold) right now.

In terms of valuation, TSM is currently trading at a Forward P/E ratio of 25.68. For comparison, its industry has an average Forward P/E of 25.68, which means TSM is trading at a no noticeable deviation to the group.

Investors should also note that TSM has a PEG ratio of 1.3 right now. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Semiconductor - Circuit Foundry was holding an average PEG ratio of 1.3 at yesterday's closing price.

The Semiconductor - Circuit Foundry industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 122, putting it in the top 49% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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