KTET Answer Key

The growth of the EPS is critical in understanding the current valuation of Tower Semiconductor. It is usually expressed as a percentage and is then referred to as the EPS growth rate, which at this time is hard to estimate, but revenue growth has been 1.50 % over the last twelve months. EPS growth is a vital measure of execution of the strategy for Tower Semiconductor since it indicates how much well the business is allocating resources to benefit shareholders.



Tower Semiconductor is part of the semiconductors industry and is in the technology sector. The company CEO is Russell C. Ellwanger. Tower Semiconductor is a pure-play independent specialty foundry dedicated to the manufacture of semiconductors. It manufactures ICs on silicon wafers, using the customer’s proprietary circuit designs.

Previous Intraday Performance:

The TSEM shares had a previous change of 1.91% which opened at 22.19 and closed at 22.39. It moved to an intraday high of 22.48 and a low of 22.19.

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Historical Performance:

Over the last five trading days, TSEM shares returned 4.72% and in the past 30 trading days it returned 9.43%. Over three months, it changed -0.04%. In one year it has changed -24.33% and within that year its 52-week high was 36.69 and its 52-week low was 19.26. TSEM stock is 16.25% above its 52 Week Low.

Our calculations result in a 200 day moving average of 27.03 and a 50 day moving average of 21.17. Right now, TSEM stock is trading -17.16% below its 200 day moving average and may not be a great opportunity to buy as it may continue to trend down.

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Liquidity:

The company has a market cap of $2.2b with 99.1m shares outstanding and a float of 99.1m shares. Trading volume was 340,166 shares and has experienced an average volume of 522,206 shares. Our calculation, using the current average volume and close price, leads me to believe that the liquidity is bad, highly speculative and an investor may want to avoid this stock.

Earnings:

The last annual reported EPS for Tower Semiconductor was 2.88 which ended on 31st of December 2017, which according to the previous close, that is a PE of 7.77. Based on 1 analyst estimate, the estimated EPS for the next quarter is 0.44. The trailing twelve month EPS is 1.91, which comes to a trailing twelve month PE of 11.72.

Below was the last reported quarterly earnings per share:
06-30-2018:  0.42
03-31-2018:  0.31
12-31-2017:  0.58
09-30-2017:  0.60



Base on our calculations, the intrinsic value per share is 38.75, which means it might be undervalued and has a margin of safety of 42.21%

Indicators Also to Watch:

Based on the latest filings, there is 44.30% of institutional ownership. Short-interest was 813,861, which was 0.82% of shares outstanding. The short-interest ratio or days-to-cover ratio was 1.49. This stock has some short interest, but it might be normal and no need to worry if long the position.

I calculated the beta to be 1.00

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Fundamental Numbers:

Based on last reported financials, the company’s return on equity is 27.38%, return on assets is 16.17%, profit margin is 19.55%, price-to-sales is 1.60 and price-to-book is 1.97.

Company Score Card:

Results are out of six:
 0  : Growth Expectations Result
 6  : Financial Safety Result
 4  : Past Performance Result
 5  : Valuation Result
 0  : Dividend Safety Result
 3  : Overall Result

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Jake McWilliams
I am an independent trader, analyst and algorithmic trading expert, having worked both for the sell side (brokerage) and the buy side (fund administration). I have been trading professionally for about 20 years. I trade stocks and forex and I play both long and short positions in underlying asset or through options. I have experience with discretionary and fully automated systems (Metatrader and Quantshare).

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