NEW YORK (TheStreet) -- Taiwan Semiconductor (TSM) rose Thursday after the company reported first-quarter results and issued record second-quarter revenue guidance that surpassed analysts' expectations.
The world's largest contract chip producer posted its eighth consecutive quarter of profit growth with NT$47.9 billion, or $1.59 billion, which surpassed the estimate of NT$43.2 billion from 19 analysts polled by Thomson Reuters. Revenue rose 11.7% year over year to NT$148.22 billion, which beat the Capital IQ consensus estimate of NT$147.78 billion.
Diluted earnings per share were NT$1.85, or 31 cents per ADR unit. Net income and diluted EPS rose 21% year over year.
Taiwan Semiconductor also forecast record revenue for the second quarter in the range of NT$180 billion to T$183 billion, above the Capital IQ consensus estimate of NT$171.75 billion.
Gross margin for the quarter was 47.5%, operating margin was 35.4% and net profit margin was 32.3%.
The stock was up 3.13% to $20.78 at 10:37 a.m. on Thursday.
Separately, TheStreet Ratings team rates TAIWAN SEMICONDUCTOR MFG CO as a "buy" with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:
"We rate TAIWAN SEMICONDUCTOR MFG CO (TSM) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Despite its growing revenue, the company underperformed as compared with the industry average of 5.1%. Since the same quarter one year prior, revenues slightly increased by 2.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
- TAIWAN SEMICONDUCTOR MFG CO reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, TAIWAN SEMICONDUCTOR MFG CO increased its bottom line by earning $1.21 versus $1.10 in the prior year. This year, the market expects an improvement in earnings ($1.42 versus $1.21).
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Semiconductors & Semiconductor Equipment industry. The net income has decreased by 0.5% when compared to the same quarter one year ago, dropping from $1,466.10 million to $1,458.32 million.
- You can view the full analysis from the report here: TSM Ratings Report