Tower Semiconductor (TSEM 2.97%) is making large good points on this week’s buying and selling. The Israel-based chip firm’s share worth was up 15.2% from final week’s market shut as of three:15 p.m. ET Friday, in keeping with information from S&P International Market Intelligence.
Tower reported its fourth-quarter outcomes earlier than the market opened on Feb. 14. The corporate posted earnings per share of $0.55 on gross sales of $351.71 million. Despite the fact that gross sales have been down on account of weaker demand within the automotive sector, this efficiency got here in forward of the typical analyst estimate’s name for per-share earnings of $0.52 on gross sales of $350 million.
Cyclical pressures weren’t as unhealthy as anticipated
Regardless of coming in higher than Wall Avenue anticipated, Tower Semiconductor’s income declined roughly 12.8% yr over yr within the fourth quarter. Gross revenue for the quarter got here in at $84 million, down from $87 million within the prior-year interval. For extra comparability, the corporate posted a gross revenue of $125 million in This autumn 2022.
Mushy demand in some key segments pushed gross sales and gross revenue decrease within the interval, but it surely appears to be like like enchancment is in sight. The corporate’s ahead steering suggests the enterprise could also be rising from a cyclical downturn.
Tower’s steering suggests the inventory may have room to run
For the primary quarter, Tower is guiding for gross sales of roughly $325 million — with the potential for gross sales to come back in someplace between 5% decrease and 5% above that concentrate on mark. Wanting forward, the chip firm mentioned that it anticipated substantial sequential quarterly gross sales development to proceed all through 2024.
TSEM PS Ratio (Ahead) information by YCharts
Tower Semi is now buying and selling at roughly 17.8 occasions this yr’s anticipated earnings and a pair of.7 occasions anticipated gross sales. Whereas the enterprise has been topic to cyclical shifts in a few of its key trade segments, it appears to be like like efficiency is on monitor to enhance within the close to time period.
Tower had beforehand been on monitor to be acquired by Intel, however the deal wound up being scuttled after the 2 corporations have been unable to safe well timed approval from Chinese language regulators. With the chip specialist’s enterprise seemingly poised to achieve momentum and its inventory nonetheless buying and selling considerably beneath the place it was priced when the potential acquisition was deserted, traders could need to take a better look.
Keith Noonan has no place in any of the shares talked about. The Motley Idiot has positions in and recommends Tower Semiconductor. The Motley Idiot recommends Intel and recommends the next choices: lengthy January 2023 $57.50 calls on Intel, lengthy January 2025 $45 calls on Intel, and brief February 2024 $47 calls on Intel. The Motley Idiot has a disclosure coverage.
