TSMC (TSM) Q1 FY12/26 Earnings Analysis
DISCLAIMER: This note is intended for US recipients only and, in particular, is not directed at, nor intended to be relied upon by any UK recipients. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Read our full disclaimer, here.
Solid Numbers, Muted Price Reaction
by Alex King, CEO, Cestrian Capital Research, Inc.
As everyone knows, fundamentals matter, but what matters more is how the market reacts to fundamentals. $TSM just posted good numbers, a modest beat on the revenue line with an uptick in balance sheet strength. Cashflow margins dropped a touch and the revenue guide indicates deceleration into Q2.
The stock is up less than 1% in pre-market New York hours. Pre-market prices are interesting but not determinative; but if TSM closes flat, light green or red, I think investors have to be ready for a correction in semiconductor (and with it, likely the indices). Market action since 7 April has been exceptionally strong and so a pullback wouldn’t be out of kilter with a continued bull market, which I think we will see. But I would, at least, be wary of piling long into chip stocks at these levels based on the reaction to the TSM numbers.
Let’s look at the earnings, valuation, stock chart and price outlook.