Here is what you need to know why Taiwan Semiconductor Manufacturing Company Ltd. (TSM) is a trend share

TSMC (TSM) has recently been one of the most sought stocks on Zacks.com. Perhaps you would like to see some of the facts that could affect the performance of the stock at short notice.

The shares of this chip company changed +22.1% in the past month compared to the Zacks S&P 500 Composite +0.4%. The Zacks Semiconductor – Circuit Foundry Industry, which belongs to TSMC, has increased 5.2% during this period. Now the main question is: where could the inventory be directed at short notice?

Although media reports or rumors about a significant change in the business prospects of a company generally lead to the fact that its shares lead to trend and an immediate change in price, there are always certain basic factors that ultimately advance the purchase and hate decision.

Here at Zacks we prioritize the evaluation of the change in the projection of the future income of a company above all. This is because we believe that the current value of his future profit current determines the current value for its shares.

Our analysis essentially is based on how the analysts of sales pages that cover the shares revises their profit estimates in order to take into account the latest business trends. If the profit estimates for a company increase, the at the time to be accompanied by the current value for its shares. And if the at the time value of a share to be added is higher than the current market price, investors tend to buy the shares, which means that the price is upwards. For this reason, empirical studies indicate a strong correlation between trends in estimating the profits and the short -term share price movements.

TSMC is expected to make a profit of $ 2.16 per share in the current quarter, which corresponds to a change of +46%compared to the previous year. In the last 30 days, the Zacks Consensus estimate has changed +2.7%.

The consensus result estimate of $ 9.06 for the current financial year shows a change of +28.7%compared to the previous year. This estimate has changed in the past 30 days by -1.1%.

For the next financial year, the consensus assessment of $ 10.43 shows a change of +15.2% compared to what TSMC is expected a year ago. Last month the estimate changed -5.4%.

Our proprietary stock assessment tool, The Zacks Rank, offers a strong externally tested track record and offers a more conclusive picture of the price direction of a share at short notice, as it effectively uses the power of profits. Due to the size of the recent change in the consensus estimate and three other factors in connection with profit estimates, TSMC is ranked 3rd (hold).

The following table shows the development of the company's 12-month consensus EPS EPS estimate:

12-month consensus EPS estimate for TSM _12monthepscharturl

Although the profit growth of a company is probably the best indicator of its financial health, not much happens if it cannot increase its income. It is almost impossible for a company to increase its income without increasing its sales over long periods of time. It is therefore crucial to know the potential sales growth of a company.

In the case of TSMC, the consensus sales of $ 28.45 billion shows for the current quarter to change +36.6%compared to the previous year. The estimates of $ 112.2 billion and $ 129.08 billion for the current and next financial years indicate changes of +24.6% or +15%.

TSMC reported sales of $ 25.53 billion in the last quarter, which corresponds to a change of +35.3%compared to the previous year. EPS of $ 2.12 comparable to USD 1.38 a year ago for the same period.

Compared to the Zacks Consensus estimate of 25.3 billion US dollars, the registered income is a surprise of +0.87%. The EPS surprise was +4.43%.

The company defeated consensus -epseps estimates in each of the following four quarters. The company exceeded consensus sales every time.

Without taking into account the assessment of a share, no investment decision can be efficient. When predicting the future price performance of a share, it is crucial to determine whether the current price correctly reflects the internal value of the underlying business and the company's growth prospects.

During the comparison of the current values of the evaluation advantages of a company, such as price-to-profit (P/E), Price-to-Sales (P/S) and Price-to-Cash-Flow (P/CF), with its own historical values, to determine whether its shares are rather evaluated, overvalued or undervalued, the relative position is comparable to prices for the relative position.

The Zacks Value Style Score (part of the Zacks Style Scores Systems), which pays attention to the grade of stocks from A to F both traditional and unconventional valuation metrics (AA is better than a C; and so on) is rather helpful to identify whether a share is overrated, legally valued or temporarily accommodated.

TSMC is evaluated on this Front D, which points out that it is with his colleagues with a bonus. Click here to display the values of some evaluation metrics that have driven this grade.

The facts discussed here and a lot of other information about Zacks.com could help determine whether it is worth paying attention to the TSMC market or not. However, the Zacks ranked 3rd indicate that it is in line with the broader market at short notice.

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Taiwan Semiconductor Manufacturing Company Ltd. (TSM): Report on free stock analysis

This article was originally published in Zack's Investment Research (Zacks.com).

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