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Taiwan Semiconductors (TSM) to Post Q4 Earnings: What's in Store?

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Taiwan Semiconductor Manufacturing Company (TSM - Free Report) is scheduled to report fourth-quarter 2020 results on Jan 14.

For fourth-quarter 2020, Taiwan Semi anticipates revenues between $12.4 billion and $12.7 billion.

The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $12.9 billion, suggesting growth of 24.1% from the year-ago quarter’s reported quarter.

Further, the consensus mark for fourth-quarter earnings is pegged at 92 cents per share, indicating an improvement of 26.03% from the prior-year reported figure.

The company surpassed the Zacks Consensus Estimate in three of the trailing four quarters, and missed the same once. It has a trailing four-quarter earnings surprise of 4.93%, on average.

Factors to Note

Taiwan Semiconductor is expected to have benefited from the uptick in chip design activity. The momentum in 5G smartphone launches is expected to have bolstered the company’s 5G smartphone penetration rate in the fourth quarter.

Additionally, its strong efforts toward the innovation of technology products are likely to have contributed well to its fourth-quarter results.

Further, the company’s deepening focus toward the full volume production of 5-nanometer (nm) is likely to get reflected in the to-be-reported quarter’s results.

Furthermore, increasing demand for the company’s 7nm technology is expected to have driven its performance in the quarter under review.

Also, the growing production of 6nm is anticipated to get reflected in the fourth-quarter results of the company.

Along with this, the 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 have driven the wafer revenue growth of Taiwan Semiconductor in the soon-to-be-reported quarter.

Additionally, the company is likely to have gained from an uptick in high-performance computing (HPC)-related applications. Moreover, strength across CPU, networking and AI accelerators are likely to get reflected in HPC revenues forthe quarter to be reported.

Also, fourth-quarter results are likely to reflect benefits from the growing foundry industry and increasing proliferation of IoT products.

However, headwinds related to the ongoing pandemic are anticipated to get reflected in the to-be-reported quarter’s results. Weak end-market demand and supply-chain disruptions, owing to the COVID-19 outbreak, are expected to have affected the company in the fourth 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.

Alphabet Inc. (GOOGL - Free Report) has an Earnings ESP of +10.23% and a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Vishay Intertechnology, Inc. (VSH - Free Report) has an Earnings ESP of +7.41% and a Zacks Rank of 2, currently.

TE Connectivity Ltd. (TEL - Free Report) has an Earnings ESP of +1.52% and a Zacks Rank of 2, currently.

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