Have you been paying attention to shares of TSMC (TSM)? Shares have been on the move with the stock up 15.4% over the past month. The stock hit a new 52-week high of $233.82 in the previous session. TSMC has gained 18.3% since the start of the year compared to the 7% gain for the Zacks Computer and Technology sector and the 18.3% return for the Zacks Semiconductor - Circuit Foundry industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, having beaten the Zacks Consensus Estimate in each of the last four quarters. In its last earnings report on April 17, 2025, TSMC reported EPS of $2.12 versus consensus estimate of $2.03 while it beat the consensus revenue estimate by 0.87%.
For the current fiscal year, TSMC is expected to post earnings of $9.28 per share on $116.93 in revenues. This represents a 31.82% change in EPS on a 29.8% change in revenues. For the next fiscal year, the company is expected to earn $10.74 per share on $137.1 in revenues. This represents a year-over-year change of 15.82% and 17.25%, respectively.
Valuation Metrics
TSMC may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). The individual style scores for Value, Growth, Momentum and the combined VGM Score run from A through F. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
TSMC has a Value Score of D. The stock's Growth and Momentum Scores are A and C, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 25.2X current fiscal year EPS estimates, which is not in-line with the peer industry average of 25.2X. On a trailing cash flow basis, the stock currently trades at 21.4X versus its peer group's average of 21.4X. Additionally, the stock has a PEG ratio of 1.21. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this is even more important than the company's VGM Score. Fortunately, TSMC currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if TSMC passes the test. Thus, it seems as though TSMC shares could have potential in the weeks and months to come.
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Taiwan Semiconductor Manufacturing Company Ltd. (TSM): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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