Why Taiwan Semiconductor (TSM) Stock Finished Higher On Thursday

NEW YORK (TheStreet) -- Shares of Taiwan Semiconductor Mfg. Co. Ltd. (TSM) finished higher 2.83% to $20.72 on Thursday after the company announced its first quarter 2014 revenue of NT$148.22 billion and diluted earnings per share of NT$1.85 (US$0.31 per ADR unit).

The company reported year-over-year first quarter revenue increased 11.6%, while net income and diluted earnings per share both increased 21%.

Net income rose to NT$47,871 in the first quarter 2014 from NT$39,577 in the first quarter of 2013. 

Compared to fourth quarter of 2013, first quarter results represent a 1.7% increase in revenue, and a 6.8% increase in net income, the company noted.

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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

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