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Why the Market Dipped But TSMC (TSM) Gained Today

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In the latest trading session, TSMC (TSM - Free Report) closed at $97.85, marking a +1.2% move from the previous day. The stock outpaced the S&P 500's daily loss of 0.39%. Meanwhile, the Dow experienced a drop of 0.19%, and the technology-dominated Nasdaq saw a decrease of 0.59%.

The the stock of chip company has risen by 4.63% in the past month, lagging the Computer and Technology sector's gain of 6.19% and the S&P 500's gain of 5.08%.

The upcoming earnings release of TSMC will be of great interest to investors. The company's upcoming EPS is projected at $1.34, signifying a 26.37% drop compared to the same quarter of the previous year. Meanwhile, our latest consensus estimate is calling for revenue of $18.99 billion, down 4.71% from the prior-year quarter.

Looking at the full year, the Zacks Consensus Estimates suggest analysts are expecting earnings of $4.97 per share and revenue of $66.45 billion. These totals would mark changes of -24.35% and -12.42%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for TSMC. Such recent modifications usually signify the changing landscape of near-term business trends. Consequently, upward revisions in estimates express analysts' positivity towards the company's business operations and its ability to generate profits.

Our research suggests that these changes in estimates have a direct relationship with upcoming stock price performance. To utilize this, we have created the Zacks Rank, a proprietary model that integrates these estimate changes and provides a functional rating system.

The Zacks Rank system, ranging from #1 (Strong Buy) to #5 (Strong Sell), possesses a remarkable history of outdoing, externally audited, with #1 stocks returning an average annual gain of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. As of now, TSMC holds a Zacks Rank of #3 (Hold).

In terms of valuation, TSMC is currently trading at a Forward P/E ratio of 19.45. For comparison, its industry has an average Forward P/E of 19.45, which means TSMC is trading at no noticeable deviation to the group.

It is also worth noting that TSM currently has a PEG ratio of 2.71. 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. By the end of yesterday's trading, the Semiconductor - Circuit Foundry industry had an average PEG ratio of 2.71.

The Semiconductor - Circuit Foundry industry is part of the Computer and Technology sector. Currently, this industry holds a Zacks Industry Rank of 92, positioning it in the top 37% of all 250+ industries.

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

Don't forget to use Zacks.com to keep track of all these stock-moving metrics, and others, in the upcoming trading sessions.


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