Tower Semiconductor (NasdaqGS:TSEM) Q3 2020 Earnings Prep

in EARNINGS/INVESTING IDEAS by

Tower Semiconductor Ltd. (NasdaqGS:TSEM) is scheduled to report Q3 earnings results on November 12, 2020.

The company is expected to report earnings of $0.18/share on revenue of $309.7 million. The consensus earnings per share (EPS) of $0.18/share is based on a poll of 6 analysts and represents a decline in eps of −28.7% over the same quarter last year, when the company reported earnings of $0.25/share.

The revenue forecast of $309.7 million based on a poll of 6 analysts implies a year-over-year (YoY) decline in revenue of −0.8%. Last year the company reported $312.1 million in revenue for the quarter.

Expected to report EPS contraction of −28.7% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $309.67 $312.12 −0.8%
EPS $0.18 $0.25 −28.7%

Earnings Call Trends

Historically, management has exceeded analyst expectations 4 out of the last 8 tracked quarters, and missed expectations 4 quarters.

What are your expectations from Tower Semiconductor Ltd. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.23 $0.22 −4.8% Missed
Q1, 2020 $0.19 $0.20 7.2% Beat
Q4, 2019 $0.26 $0.22 −13.8% Missed
Q3, 2019 $0.24 $0.25 2.0% Beat
Q2, 2019 $0.22 $0.24 7.5% Beat
Q1, 2019 $0.29 $0.30 2.9% Beat
Q4, 2018 $0.42 $0.41 −1.6% Missed
Q3, 2018 $0.40 $0.37 −8.3% Missed

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by falling −7.7%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 29, 2020 $22.96 $21.19 −7.7% Decline
May 13, 2020 $20.12 $20.06 −0.3% Decline
February 18, 2020 $24.10 $22.24 −7.7% Decline
November 13, 2019 $23.04 $22.61 −1.9% Decline

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.87, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.87 implies a 0.2% chance of earnings manipulation.

Fundamentals And Technical Analysis

Tower Semiconductor Ltd. is currently trading at $23.15/share, up 3.9% for the day. The company is trading at approximately 90.3% of its 52-week high of $25.80/share. The company’s stock price is up 9.2% since the last earnings report and up 9.9% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 74.48 suggests the company is trading in technically overbought territory. The RSI is considered overbought when above 70 and oversold when below 30.


NasdaqGS:TSEM Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 31.51 and a forward P/E multiple of 25.84.

Tower Semiconductor Ltd.’s current share price also implies a price-to-book (P/B) multiple of 1.78. The following table summarizes some other key fundamental ratios:

Data as of November 9, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $23.15
P/E Ratio 31.5x
P/E Ratio (Fwd) 25.8x
PEG Ratio −0.9
Total Debt / Total Capital 11.2%
Levered Free Cash Flow $47.84 million
EV / EBITDA 6.8x

Finbox

Tower Semiconductor Ltd. is a mid-cap stock with a market capitalization of $2.39 billion and a total enterprise value of $1.959 billion. The company operates in the Information Technology sector and the Semiconductors & Semiconductor Equipment industry.

Tower Semiconductor Ltd., an independent semiconductor foundry, manufactures and markets analog intensive mixed-signal semiconductor devices in the United States, Japan, Asia, and Europe. It provides various customizable process technologies, including SiGe, BiCMOS, mixed-signal/CMOS, RF CMOS, CMOS image sensor, integrated power management, and MEMS. The company also offers transfer optimization and development process services to integrated device manufacturers and fabless companies. It serves various markets, such as consumer electronics, personal computers, communications, automotive, industrial, aerospace, and medical device products. The company was founded in 1993 and is headquartered in Migdal Haemek, Israel.

Expertise: financial technology, analyzing market trends. Brian is a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to research stock fundamentals. Brian’s background is in physics & computer science and previously worked as a software engineer at GE Healthcare. He enjoys applying his expertise in technology to help find market trends that impact investors. Brian can be reached at brian@finbox.io or at +1 (516) 778-6257.

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