Taiwan Semiconductor (TSM) Stock Falls Despite Earnings Beat, Record Guidance

NEW YORK (TheStreet) -- Taiwan Semiconductor TSM fell Wednesday despite second-quarter earnings that beat analysts' expectations and guidance for record third-quarter revenue.

The world's largest contract chip maker reported a 17.4% year-over-year increase in consolidated revenue to NT$183.02 billion, which edged the Capital IQ consensus of NT$182 billion. The company also reported net income of NT$59.7 billion, up from $51.81 billion in the same period last year, and earnings per share of NT$2.30, which beat the consensus of NT$2.16. Net income and diluted EPS both increased 15.2%, due largely to a tax rate increase. 

Taiwan Semiconductor also expects new revenue highs in the third quarter. The company predicted revenue of NT$206 billion to NT$209 billion, or US$6.85 billion to US$6.95 billion. This would mark a 29% year-over-year increase from NT$162.58 billion.

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The stock was down 5.05% to $21.33 at 10:11 a.m. More than 11.8 million shares had changed hands, which beat the average volume of 9,846,840.

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, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, growth in earnings per share and increase in net income. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."

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