NEW YORK (TheStreet) -- Taiwan Semiconductor (TSM) - Get Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR Report shares are up 1.92% to $19.12 in afternoon trading on Tuesday after the chipmaker and Apple (AAPL) - Get Apple Inc. (AAPL) Report supplier announced that it is exiting its solar operations.
The company will shutter its solar operations by the end of the month in a move that will reduce the company's EPS by 7 cents in the third quarter.
"TSMC continues to believe that solar power is an important source of green energy and that solar module manufacturing remains a robust and growing industry. But despite six years of hard work, we have not found a way to make a sustainable profit," said TSM Solar chairman Steve Tsu.
The company said that it will honor all existing product warranties and employees working in the solar division will be offered alternative positions.
Taiwan Semiconductor is scheduled to release its third quarter results on October 15 with analysts expecting the company's earnings to fall slightly to 45 cents versus the 49 cents per share the company earned in the previous quarter.
TheStreet Ratings team rates TAIWAN SEMICONDUCTOR MFG CO as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate TAIWAN SEMICONDUCTOR MFG CO (TSM) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth and compelling growth in net income. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 10.5%. Since the same quarter one year prior, revenues slightly increased by 8.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- TAIWAN SEMICONDUCTOR MFG CO has improved earnings per share by 28.2% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, TAIWAN SEMICONDUCTOR MFG CO increased its bottom line by earning $1.61 versus $1.18 in the prior year. This year, the market expects an improvement in earnings ($1.84 versus $1.61).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income increased by 28.2% when compared to the same quarter one year prior, rising from $2,029.26 million to $2,601.47 million.
- TSM has underperformed the S&P 500 Index, declining 5.91% from its price level of one year ago. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
- You can view the full analysis from the report here: TSM Ratings Report