Taiwan Semiconductor (TSM) Adds 0.9% Ahead of Earnings: What To Watch

Shares of Taiwan Semiconductor TSM added 0.9% during regular hours Wednesday, the last day of trading before it releases its latest quarterly earnings report. Investors displayed excitement ahead of the report, and this is certainly a stock to watch once the full results are in.

The semiconductor industry has been one of the most active this year, initially surging on a massive spike in cryptocurrency mining demand that saw chip prices rise exponentially. However, demand has cooled in recent months, and TSM, the world’s largest chip contract maker, has felt the burn. The firm had to lower its guidance for the year on softer smartphone demand and uncertainty in the crypto industry. Therefore Wednesday’s earnings report will be a key indicator as to whether headwinds will remain or if greener pastures are ahead.  

According to our latest Zacks Consensus Estimates, analysts expect Taiwan Semiconductor to report earnings of $0.45 per share on $7.85 billion in revenue. These results would mark year-over-year growth rates of 7.1% and 11.1%, respectively.

Investors should also note that TSM’s consensus earnings projection has remained flat over the course of the quarter, with no revisions being made in the last two months for any of the firms’ upcoming reporting periods. This lack of activity has led to the stock’s neutral Zacks Rank #3 (Hold).

Looking at share price performance, TSM has added about 5.2% over the past year. However, the stock has performed poorly as of late, losing nearly 3.4% on a year-to-date basis. More recently, shares have dropped about 3% over the trailing 12 weeks.

Given that TSM missed expectations in its most recent earnings report, a strong performance might be what it needs to break out of its current lull. To gauge how likely the company is to outperform estimates tomorrow morning, we can turn to our exclusive Earnings ESP figure.

Zacks Earnings ESP (Expected Surprise Prediction) compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter. The Most Accurate Estimate is a version of the Zacks Consensus whose definition is related to change.

This is done because, generally speaking, when an analyst posts an estimate right before an earnings release, it means that they have fresh information which could potentially be more accurate than what analysts thought about a company two or three months ago.

A positive Earnings ESP paired with a Zacks Rank #3 (Hold) or better ranking helps us feel confident about the potential for an earnings beat. In fact, our 10-year backtest has revealed that this methodology has accurately produced a positive surprise 70% of the time.

MS currently has a flat Earnings ESP of 0%. This, combined with its Zacks Rank, leave us inconclusive about its chances at beating earnings estimates on Wednesday. The company has beat expectations in 8 out of its last 10 earnings releases, but given recent market trends this one could go either way.

Make sure to check back here for our full analysis once Taiwan Semiconductor reports!

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