What's in Store for Taiwan Semiconductor's (TSM) Q2 Earnings?

Taiwan Semiconductor Manufacturing Company TSM is scheduled to report second-quarter 2020 results on Jul 16.

For second-quarter 2020, Taiwan Semi anticipates revenues between $10.1 billion and $10.4 billion.

The Zacks Consensus Estimate for second-quarter revenues is pegged at $10.36 billion, suggesting growth of 33.7% from the year-ago quarter.

Further, the consensus mark for the second-quarter earnings is pegged at 73 cents per share, indicating an improvement of 78.1% from the prior-year reported figure.

Taiwan Semiconductor Manufacturing Company Ltd. Price and EPS Surprise

Taiwan Semiconductor Manufacturing Company Ltd. Price and EPS Surprise

Taiwan Semiconductor Manufacturing Company Ltd. price-eps-surprise | Taiwan Semiconductor Manufacturing Company Ltd. Quote

Factors to Note

Taiwan Semi’sstrong efforts toward innovation of technology products are likely to get reflected in the second-quarter results.

The company made its 7-nanometer (nm) Automotive Design Enablement Platform (ADEP) available during the second quarter, which remains positive. It is likely to have gained solid traction across AI Inferencing Engines, Advanced Driver-assistance Systems and Autonomous Driving applications on the back of ADEP.

Moreover, strengthening demand for the company’s 7nm technology might have driven the company’s performance in the to-be-reported quarter.

Further, ramping up production of 6nm may have contributed to the to-be-reported quarter’s performance. Also, the company’s strong efforts toward ensuring full volume production of 5nm are likely to get reflected in the second-quarter results. Furthermore, strong momentum across advanced technologies, which are defined as 16nm and more, is likely to have benefited the company during the quarter under review.

Consequently, all these are likely to get reflected in the company’s second-quarter wafer revenues.

Additionally, ramp up in 5G smartphones and accelerating 5G deployment might have contributed to the company’s second-quarter performance despite the adverse effects of coronavirus (COVID-19) pandemic.

Further, strength across CPU, networking and AI accelerators are likely to get reflected in HPC revenues in the quarter to be reported. Moreover, rising HPC related demand is expected to have remained a major positive.

Also, the second-quarter performance is likely to reflect growing foundry industry and increasing proliferation of IoT products.

However, ongoing pandemic might get reflected in the to-be-reported quarter’s performance. Weak end-market demand and supply-chain disruptions owing to highly contagious COVID-19 are expected to have acted as headwinds during the second quarter.

What Our Model Says

Our proven model doesn’t conclusively predict an earnings beat for Taiwan Semiconductor this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Taiwan Semiconductor has a Zacks Rank #2 and an Earnings ESP of 0.00%.You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are some companies, which, per our model, have the right combination of elements to post an earnings beat in their soon-to-be-reported quarterly results:

Fastenal Company FAST has an Earnings ESP of +7.89% and a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Domino's Pizza, Inc. DPZ has an Earnings ESP of +12.27% and a Zacks Rank of 2, at present.

Abbott Laboratories ABT has an Earnings ESP of +7.48% and a Zacks Rank of 2, currently.

Today's Best Stocks from Zacks

Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.

This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.

See their latest picks free >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Dominos Pizza Inc (DPZ) : Free Stock Analysis Report
 
Fastenal Company (FAST) : Free Stock Analysis Report
 
Abbott Laboratories (ABT) : Free Stock Analysis Report
 
Taiwan Semiconductor Manufacturing Company Ltd. (TSM) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research