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Taiwan Semiconductor and Robert Half have been highlighted as Zacks Bull and Bear of the Day
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For Immediate Release
Chicago, IL – August 12, 2024 – Zacks Equity Research shares Taiwan Semiconductor (TSM - Free Report) as the Bull of the Day and Robert Half Inc. (RHI - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on American Airlines (AAL - Free Report) , United Airlines (UAL - Free Report) and Delta Air Lines (DAL - Free Report) .
Taiwan Semiconductoris the world's largest and most advanced contract semiconductor manufacturer, or "foundry." Founded in 1987 and headquartered in Hsinchu, Taiwan, TSM produces chips for a wide range of industries, including consumer electronics, automotive, and now the Artificial Intelligence industries.
The company is known for its cutting-edge technology and innovation, especially in advanced process nodes like 5nm and 3nm, making it a crucial supplier for tech giants such as Apple, AMD, and Nvidia. TSM's dominant position in the semiconductor industry makes it a key player in the global tech supply chain and a premier asset for investors.
Not only does Taiwan Semiconductor play a critical role in the technology sector, but it also boasts a top Zacks Rank, strong earnings growth forecasts and a reasonable valuation. Furthermore, its stock has compounded at an impressive 17.1% annualized over the last 20 years, more than double the market average, and seems likely that it will continue to outperform based on current estimates.
AI Expansion Continues to Boost Sales at TSM
Taiwan Semiconductor, who shares monthly updates on its revenues, announced that in July revenues grew an incredible 44.7% year-on-year (YoY) to $7.9 billion. This growth outpaces the previous month (32.9%) and suggests strong ongoing demand for AI chips, particularly from major clients like Nvidia and Apple.
At its most recent quarterly meeting, TSM’s CEO, C.C. Wei, indicated the company could potentially raise prices as customers shift to its most advanced technologies. Despite investor concerns over the AI boom's sustainability, TSM remains well-positioned for robust performance, particularly with its involvement in high-performance computing led by AI, which accounted for 52% of its recent revenue.
Analysts Raise Earnings Forecasts at Taiwan Semiconductor
Over the last month, analysts have near unanimously raised earnings estimates across timeframes, giving TSM a Zacks Rank #1 (Strong Buy) rating. This top rank significantly increases the odds of a near-term rally and confirms the continued strength of the underlying business.
Over the next three to five years, earnings are forecast to grow 26.5% annually, which is an incredible pace for such a mammoth company.
Taiwan Semiconductor Shares Trade at a Fair Valuation
Today, Taiwan Semiconductor is trading at a one year forward earnings multiple of 25.8x. This is above the broad market average and above its five-year median of 21x. However, it should be noted that the tremendous tailwind from AI is a reasonable cause for this elevated earnings multiple as TSM and the industry as a whole may be growing faster than recent history.
Additionally, with earnings expected to grow 26.5% annually, TSM actually has a PEG ratio below 1, which is a discount based on the metric. At the very least, TSM is trading near fair value, with expectations of both sales and earnings to grow above 20% annually.
Should Investors Buy Taiwan Semiconductor Stock?
Given the impressive growth trajectory and strong financial outlook, Taiwan Semiconductor presents a compelling investment opportunity. The company’s dominant position in the semiconductor industry, coupled with its critical role in AI and high-performance computing, supports a robust long-term growth narrative.
For investors seeking exposure to the rapidly expanding AI sector and a key player in the global tech supply chain, Taiwan Semiconductor is well-positioned to deliver strong returns. Despite the slightly elevated valuation, the company’s growth prospects, and critical industry role make it a worthy consideration for any growth-oriented portfolio.
Robert Half Inc. is a global staffing and consulting firm specializing in professional services. Founded in 1948 and headquartered in Menlo Park, California, Robert Half operates through various divisions, including Accountemps, OfficeTeam, Robert Half Technology, Robert Half Finance & Accounting, and Protiviti, its consulting arm. The company provides temporary, full-time, and project-based staffing solutions in areas such as accounting, finance, technology, legal, and administrative support.
Although it is one of the leaders in the Staffing Firm industry, the business has stagnated over the last five years. Over that period sales, earnings and the stock price are flat. Furthermore, Robert Half is trading at a premium to its historical valuation and has a Zacks Rank #5 (Strong Sell) rating.
Based on these factors, Robert Half Inc. is a stock investor may want to avoid until the business can turn around the faltering growth rate.
Analysts Downgrade Estimates at Robert Half Inc.
Robert Half operates in a highly competitive market and faces tough competition in terms of price and reliability of service on a national, regional and local basis. Earnings estimates have been trending lower for more than two years now, dragging the stock down with it. These downgrades give RHI a Zacks Rank #5 (Strong Sell), which indicates there may be further downside ahead.
Sales are expected to fall 8.8% this year and earnings are projected to fall 33.5% in the same period. Over the next three to five years, earnings are expected to grow just 4.1% annually.
RHI Trades at a Premium Opening Room to the Downside
Even with the uncertain outlook for Robert Half’s business, the stock still trades at a premium valuation. At 23.6x forward earnings it is above the market average and above its 10-year median of 18.7x.
Furthermore, with EPS growth forecasts of just 4.1% annually, the shares trade at a PEG ratio of 5.73x, which is an extremely high reading for the metric.
Should Investors Buy Robert Half Inc. Shares?
Given the current challenges facing Robert Half Inc., investors may want to exercise caution before considering this stock. The company has struggled with stagnation in both sales and earnings over the past five years, and its recent performance has been underwhelming. With a Zacks Rank #5 (Strong Sell) and analysts consistently downgrading earnings estimates, the near-term outlook for the stock appears bleak.
While Robert Half remains a significant player in the staffing industry, its recent struggles and high valuation make it a risky investment at this time. Investors may want to wait for clearer signs of a turnaround before considering adding RHI to their portfolios.
Additional content:
American Airlines (AAL - Free Report) Plunges 32% in 3 Months: Buy the Dip?
Shares of Fort Worth, TX-based airline heavyweight American Airlines have not had a good time on the bourses of late, declining 31.7% over the past 90 days. The horrendous price performance resulted in AAL underperforming its industry’s 10.5% decline in the said time frame as well as the S&P 500, of which the airline is a key member. Additionally, AAL’s price performance compared unfavorably with that of fellow U.S. airline operators United Airlines and Delta Air Lines in the same timeframe.
In fact, American Airlines shares have plummeted 65% over the past five years and are currently trading at levels touched in 2020, which represented the peak COVID-19 times. During those times, the entire airline industry had basically come to a standstill, with passenger revenues hitting a nadir.
Given the significant pullback in AAL’s shares currently, investors might be tempted to snap up the stock. But is this the right time to buy AAL? Let’s find out.
Bearish Guidance for the Current Year
On Jul 25, American Airlines reported lower-than-expected revenues for the second quarter of 2024. Additionally, the airline trimmed its earnings per share forecast for full-year 2024, citing pricing pressure with excess capacity characterizing certain markets.
The practice of price cuts by low-cost carriers, as they struggle to fill the excess seats this summer, is hurting even bigger rivals. Discount carriers have added too many seats that they are now attempting to fill by lowering fares and compelling airline majors to do the same to stay competitive. This phenomenon dampened American Airlines’ pricing power. AAL’s management now expects current-year adjusted earnings per share in the 70 cents-$1.30 range (earlier expectation was in the range of $2.25-$3.25 per share).
AAL’s revenue miss was not surprising as in May CEO Robert Isom stated that the softness pertaining to bookings was due to changes in the airline's sales strategy. Vasu Raja, AAL’s chief commercial officer, who was spearheading the new sales and distribution strategy, stepped down in June.
Other Headwinds
Apart from the pricing and top-line woes the northward movement in operating expenses is hurting American Airlines’ bottom line, challenging its financial stability. In the first half of 2024, total operating expenses rose 7.9% year over year to $25.5 billion. The surge in operating expenses was primarily caused by an increase in labor costs and fuel expenses. Expenses on wages and benefits rose 13.1% in the same time. As a result of the deal with pilots inked last year, labor costs are surging.
The ongoing production cuts adopted by major oil-producing nations and geopolitical tensions are pushing up fuel costs. Management expects fuel prices (including taxes) to be between $2.55 and $2.65 per gallon for the third quarter of 2024. The metric is expected to be between $2.65 and $2.75 per gallon for the full year.
We are also concerned about its high debt levels. The company’s times interest earned ratio of 1.5 at 2023-end compares unfavorably with the industry’s ratio of 4.6.
Given the headwinds surrounding the stock, earnings estimates have been southbound.
Upbeat Air Travel Demand: A Saving Grace
Strong passenger volumes bode well for AAL. While air travel demand is particularly strong on the leisure front, business travel has also made an encouraging comeback. Driven by the air travel demand strength, AAL’s top line increased 2.5% year over year in the first half of 2024. This was driven by a 2.4% rise in passenger revenues.
From a valuation perspective, AAL is trading at a discount compared to the industry, going by its forward 12-month price-to-sales ratio. The reading is also below its median over the last five years. The company has a Value Score of A.
To Sum Up
There is no doubt that the stock is attractively valued and upbeat passenger revenues are serving AAL well. However, given the abovementioned headwinds, we believe that it is not at all advisable to buy the dip in this Zacks Rank #5 (Strong Sell) stock until the company demonstrates substantial improvement in its performance. With declining earnings estimates, the stock is witnessing negative investor sentiments.
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
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Taiwan Semiconductor and Robert Half have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – August 12, 2024 – Zacks Equity Research shares Taiwan Semiconductor (TSM - Free Report) as the Bull of the Day and Robert Half Inc. (RHI - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on American Airlines (AAL - Free Report) , United Airlines (UAL - Free Report) and Delta Air Lines (DAL - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
Taiwan Semiconductoris the world's largest and most advanced contract semiconductor manufacturer, or "foundry." Founded in 1987 and headquartered in Hsinchu, Taiwan, TSM produces chips for a wide range of industries, including consumer electronics, automotive, and now the Artificial Intelligence industries.
The company is known for its cutting-edge technology and innovation, especially in advanced process nodes like 5nm and 3nm, making it a crucial supplier for tech giants such as Apple, AMD, and Nvidia. TSM's dominant position in the semiconductor industry makes it a key player in the global tech supply chain and a premier asset for investors.
Not only does Taiwan Semiconductor play a critical role in the technology sector, but it also boasts a top Zacks Rank, strong earnings growth forecasts and a reasonable valuation. Furthermore, its stock has compounded at an impressive 17.1% annualized over the last 20 years, more than double the market average, and seems likely that it will continue to outperform based on current estimates.
AI Expansion Continues to Boost Sales at TSM
Taiwan Semiconductor, who shares monthly updates on its revenues, announced that in July revenues grew an incredible 44.7% year-on-year (YoY) to $7.9 billion. This growth outpaces the previous month (32.9%) and suggests strong ongoing demand for AI chips, particularly from major clients like Nvidia and Apple.
At its most recent quarterly meeting, TSM’s CEO, C.C. Wei, indicated the company could potentially raise prices as customers shift to its most advanced technologies. Despite investor concerns over the AI boom's sustainability, TSM remains well-positioned for robust performance, particularly with its involvement in high-performance computing led by AI, which accounted for 52% of its recent revenue.
Analysts Raise Earnings Forecasts at Taiwan Semiconductor
Over the last month, analysts have near unanimously raised earnings estimates across timeframes, giving TSM a Zacks Rank #1 (Strong Buy) rating. This top rank significantly increases the odds of a near-term rally and confirms the continued strength of the underlying business.
Over the next three to five years, earnings are forecast to grow 26.5% annually, which is an incredible pace for such a mammoth company.
Taiwan Semiconductor Shares Trade at a Fair Valuation
Today, Taiwan Semiconductor is trading at a one year forward earnings multiple of 25.8x. This is above the broad market average and above its five-year median of 21x. However, it should be noted that the tremendous tailwind from AI is a reasonable cause for this elevated earnings multiple as TSM and the industry as a whole may be growing faster than recent history.
Additionally, with earnings expected to grow 26.5% annually, TSM actually has a PEG ratio below 1, which is a discount based on the metric. At the very least, TSM is trading near fair value, with expectations of both sales and earnings to grow above 20% annually.
Should Investors Buy Taiwan Semiconductor Stock?
Given the impressive growth trajectory and strong financial outlook, Taiwan Semiconductor presents a compelling investment opportunity. The company’s dominant position in the semiconductor industry, coupled with its critical role in AI and high-performance computing, supports a robust long-term growth narrative.
For investors seeking exposure to the rapidly expanding AI sector and a key player in the global tech supply chain, Taiwan Semiconductor is well-positioned to deliver strong returns. Despite the slightly elevated valuation, the company’s growth prospects, and critical industry role make it a worthy consideration for any growth-oriented portfolio.
Bear of the Day:
Robert Half Inc. is a global staffing and consulting firm specializing in professional services. Founded in 1948 and headquartered in Menlo Park, California, Robert Half operates through various divisions, including Accountemps, OfficeTeam, Robert Half Technology, Robert Half Finance & Accounting, and Protiviti, its consulting arm. The company provides temporary, full-time, and project-based staffing solutions in areas such as accounting, finance, technology, legal, and administrative support.
Although it is one of the leaders in the Staffing Firm industry, the business has stagnated over the last five years. Over that period sales, earnings and the stock price are flat. Furthermore, Robert Half is trading at a premium to its historical valuation and has a Zacks Rank #5 (Strong Sell) rating.
Based on these factors, Robert Half Inc. is a stock investor may want to avoid until the business can turn around the faltering growth rate.
Analysts Downgrade Estimates at Robert Half Inc.
Robert Half operates in a highly competitive market and faces tough competition in terms of price and reliability of service on a national, regional and local basis. Earnings estimates have been trending lower for more than two years now, dragging the stock down with it. These downgrades give RHI a Zacks Rank #5 (Strong Sell), which indicates there may be further downside ahead.
Sales are expected to fall 8.8% this year and earnings are projected to fall 33.5% in the same period. Over the next three to five years, earnings are expected to grow just 4.1% annually.
RHI Trades at a Premium Opening Room to the Downside
Even with the uncertain outlook for Robert Half’s business, the stock still trades at a premium valuation. At 23.6x forward earnings it is above the market average and above its 10-year median of 18.7x.
Furthermore, with EPS growth forecasts of just 4.1% annually, the shares trade at a PEG ratio of 5.73x, which is an extremely high reading for the metric.
Should Investors Buy Robert Half Inc. Shares?
Given the current challenges facing Robert Half Inc., investors may want to exercise caution before considering this stock. The company has struggled with stagnation in both sales and earnings over the past five years, and its recent performance has been underwhelming. With a Zacks Rank #5 (Strong Sell) and analysts consistently downgrading earnings estimates, the near-term outlook for the stock appears bleak.
While Robert Half remains a significant player in the staffing industry, its recent struggles and high valuation make it a risky investment at this time. Investors may want to wait for clearer signs of a turnaround before considering adding RHI to their portfolios.
Additional content:
American Airlines (AAL - Free Report) Plunges 32% in 3 Months: Buy the Dip?
Shares of Fort Worth, TX-based airline heavyweight American Airlines have not had a good time on the bourses of late, declining 31.7% over the past 90 days. The horrendous price performance resulted in AAL underperforming its industry’s 10.5% decline in the said time frame as well as the S&P 500, of which the airline is a key member. Additionally, AAL’s price performance compared unfavorably with that of fellow U.S. airline operators United Airlines and Delta Air Lines in the same timeframe.
In fact, American Airlines shares have plummeted 65% over the past five years and are currently trading at levels touched in 2020, which represented the peak COVID-19 times. During those times, the entire airline industry had basically come to a standstill, with passenger revenues hitting a nadir.
Given the significant pullback in AAL’s shares currently, investors might be tempted to snap up the stock. But is this the right time to buy AAL? Let’s find out.
Bearish Guidance for the Current Year
On Jul 25, American Airlines reported lower-than-expected revenues for the second quarter of 2024. Additionally, the airline trimmed its earnings per share forecast for full-year 2024, citing pricing pressure with excess capacity characterizing certain markets.
The practice of price cuts by low-cost carriers, as they struggle to fill the excess seats this summer, is hurting even bigger rivals. Discount carriers have added too many seats that they are now attempting to fill by lowering fares and compelling airline majors to do the same to stay competitive. This phenomenon dampened American Airlines’ pricing power. AAL’s management now expects current-year adjusted earnings per share in the 70 cents-$1.30 range (earlier expectation was in the range of $2.25-$3.25 per share).
AAL’s revenue miss was not surprising as in May CEO Robert Isom stated that the softness pertaining to bookings was due to changes in the airline's sales strategy. Vasu Raja, AAL’s chief commercial officer, who was spearheading the new sales and distribution strategy, stepped down in June.
Other Headwinds
Apart from the pricing and top-line woes the northward movement in operating expenses is hurting American Airlines’ bottom line, challenging its financial stability. In the first half of 2024, total operating expenses rose 7.9% year over year to $25.5 billion. The surge in operating expenses was primarily caused by an increase in labor costs and fuel expenses. Expenses on wages and benefits rose 13.1% in the same time. As a result of the deal with pilots inked last year, labor costs are surging.
The ongoing production cuts adopted by major oil-producing nations and geopolitical tensions are pushing up fuel costs. Management expects fuel prices (including taxes) to be between $2.55 and $2.65 per gallon for the third quarter of 2024. The metric is expected to be between $2.65 and $2.75 per gallon for the full year.
We are also concerned about its high debt levels. The company’s times interest earned ratio of 1.5 at 2023-end compares unfavorably with the industry’s ratio of 4.6.
Given the headwinds surrounding the stock, earnings estimates have been southbound.
Upbeat Air Travel Demand: A Saving Grace
Strong passenger volumes bode well for AAL. While air travel demand is particularly strong on the leisure front, business travel has also made an encouraging comeback. Driven by the air travel demand strength, AAL’s top line increased 2.5% year over year in the first half of 2024. This was driven by a 2.4% rise in passenger revenues.
From a valuation perspective, AAL is trading at a discount compared to the industry, going by its forward 12-month price-to-sales ratio. The reading is also below its median over the last five years. The company has a Value Score of A.
To Sum Up
There is no doubt that the stock is attractively valued and upbeat passenger revenues are serving AAL well. However, given the abovementioned headwinds, we believe that it is not at all advisable to buy the dip in this Zacks Rank #5 (Strong Sell) stock until the company demonstrates substantial improvement in its performance. With declining earnings estimates, the stock is witnessing negative investor sentiments.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.