Taiwan Semiconductor Manufacturing Company: A Closer Look at TSMC's Stock Performance

TSMC (TSM) has gained significant attention among investors, becoming one of the most searched-for stocks recently. This interest prompts a closer examination of what the company and its stock might offer in the near future.

In the past month, TSMC's shares have shown a modest return of +0.9%. In contrast, the Zacks S&P 500 composite has experienced a +2.9% change during the same period. The Zacks Semiconductor - Circuit Foundry industry, which encompasses TSMC, has seen a gain of 5.1%. With this context, the critical question for investors is: What direction will TSMC's stock take moving forward?

Earnings Estimates and Revisions

Investors should focus on how analysts are adjusting their earnings projections for TSMC. At Zacks, this is viewed as crucial because a company's fair value is fundamentally linked to its future earnings. When analysts increase their earnings estimates, this often leads to a higher fair stock value. If the current market price is lower than this fair value, it typically results in investor interest and a subsequent price increase. Historical trends show a strong relationship between earnings estimate revisions and short-term stock price movements.

Looking at TSMC's current quarter, the expected earnings per share (EPS) is $2.14, reflecting a +48.6% increase from the previous year. The Zacks Consensus Estimate has risen by +6.2% over the last month.

For the complete fiscal year, analysts estimate earnings of $6.95 per share, indicating a +34.2% increase from the year before, with this estimate changing positively by +3% in the last 30 days.

Additionally, for the next fiscal year, the estimated EPS is projected at $8.86, representing a +27.5% increase compared to the current year. This estimate has also seen a positive adjustment of +1.4% in the past month.

Moreover, TSMC has a robust track record verified by external audits. Its Zacks Rank of #2 (Buy) indicates favorable predictions for the stock’s near-term performance, derived from recent changes in earnings projections and other associated metrics.

Projected Revenue Growth

While earnings growth is paramount for assessing a company's health, revenue growth is equally vital, as sustained profits are challenging without corresponding revenue increases. In TSMC’s case, the consensus sales estimate for the current quarter sits at $26.46 billion, which marks a projected +34.9% increase year-over-year. For the current fiscal year, estimates anticipate revenue of $88.39 billion, reflecting a +27.6% change, while the next fiscal year is expected to generate $110.43 billion, showing a +24.9% increase.

Last Reported Results and Performance History

In its latest report, TSMC recorded revenues of $23.5 billion, a significant +36% increase from the same quarter last year. The company reported EPS of $1.94, up from $1.29 a year ago. Additionally, TSMC's revenues exceeded the Zacks Consensus Estimate of $22.72 billion by +3.47%, and its EPS was ahead by +11.49%.

The company has consistently surpassed consensus EPS estimates in the last four quarters, beating revenue expectations in each instance.

Valuation Considerations

Understanding a stock's valuation is essential for making informed investment decisions. Investors need to determine whether TSMC’s current price accurately reflects its intrinsic business value and growth potential.

To assess this, one can compare TSMC’s current valuation multiples, such as price-to-earnings (P/E) and price-to-sales (P/S), with its historical values. This approach helps identify whether a stock is overvalued, undervalued, or trading at a fair value when compared to its peers.

TSMC currently holds a Value Style Score of B, indicating that it is trading at a discount relative to its peers. This assessment utilizes both traditional and unique valuation metrics.

Conclusion

The insights provided here, along with broader evaluations of TSMC, can guide investors in deciding whether to take note of the ongoing buzz surrounding the company. Notably, the stock's Zacks Rank of #2 suggests it may outperform the larger market in the near term.

TSMC, Earnings, Revenue