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Philip van Doorn

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Sept. 13, 2022, 1:06 p.m. EDT

12 semiconductor stocks bucking the downcycle trend

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By Philip van Doorn

Semiconductor stocks have been great outperformers over long periods, but their movement this year underscores how cyclical the industry can be.

Here is a look behind the numbers that are driving down shares of chip makers, followed by a summary of the group’s excellent long-term record and a look at what may lie ahead.

Over long periods, investors love to see consensus estimates for companies’ sales and profits increasing steadily. What can be better than a smooth upward slope to the right?

The most common valuation metric used by stock investors is the forward price-to-earnings ratio — a company’s current share price divided by the consensus earnings-per-share estimate for the following 12 months. It is reasonable to expect the rolling 12-month estimates to increase as time passes by. Those increases support rising stock prices over time.

A look at the PHLX Semiconductor Index /zigman2/quotes/210598361/realtime SOX -1.19% illustrates that some of the P/E denominators have fallen hard recently. This index of 30 U.S.-listed chip makers is weighted by market capitalization and tracked by the iShares Semiconductor ETF /zigman2/quotes/209255350/composite SOXX -1.13% . Here’s a snapshot of the exchange traded fund’s forward P/E ratios as of Sept. 2 and June 30:

Current forward P/E Closing price – Sept. 2 Consensus EPS estimate – NTM Forward P/E – June 30 Closing price – June 30 Consensus EPS estimate – NTM – June 30
13.9 $358.85 $25.73 12.6 $349.61 $27.75
Source: FactSet

This may not look so bad — SOXX’s share price has risen since the end of June and the ETF’s rolling 12-month consensus EPS estimate has declined by 7%. Then again, investors aren’t pleased — SOXX is down 34% this year.

Now let’s dig into the SOXX 30 for some ugly numbers. Here’s a look at changes in rolling forward EPS and sales estimates among analysts polled by FactSet for the 12 largest U.S.-listed makers of semiconductors or related equipment (by market value) since the end of June:

Company Ticker Change in EPS estimate EPS estimate – NTM EPS estimate – NTM – June 30 Change in sales estimate Estimated sales – NTM ($bil) Estimated sales – NTM – June 30 ($bil)
Taiwan Semiconductor Manufacturing Co. Ltd. ADR /zigman2/quotes/204359850/composite TSM 5% $6.27 $5.97 4% $79,992 $77,099
Nvidia Corp. /zigman2/quotes/200467500/composite NVDA -31% $4.04 $5.88 -16% $30,071 $36,005
Broadcom Inc. /zigman2/quotes/200646538/composite AVGO 3% $40.23 $39.23 2% $34,878 $34,204
ASML Holding NV ADR /zigman2/quotes/210293876/composite ASML -8% $18.06 $19.69 -5% $24,505 $25,706
Texas Instruments Inc. /zigman2/quotes/202237907/composite TXN 2% $9.09 $8.88 2% $19,893 $19,583
Qualcomm Inc. /zigman2/quotes/206679220/composite QCOM -1% $12.98 $13.08 -1% $46,838 $47,269
Advanced Micro Devices Inc. /zigman2/quotes/208144392/composite AMD 3% $4.67 $4.54 3% $28,641 $27,907
Intel Corp. /zigman2/quotes/203649727/composite INTC -26% $2.57 $3.47 -11% $68,033 $76,143
Applied Materials Inc. /zigman2/quotes/209393259/composite AMAT -4% $7.98 $8.31 -3% $26,215 $27,097
Analog Devices Inc. /zigman2/quotes/201631938/composite ADI -2% $9.64 $9.82 -1% $12,135 $12,259
Micron Technology Inc. /zigman2/quotes/205710729/composite MU -51% $5.18 $10.67 -27% $26,976 $37,165
Lam Research Corp. /zigman2/quotes/208077897/composite LRCX -1% $37.29 $37.83 -2% $19,045 $19,417
Source: FactSet

Click on the tickers for more about each company, including analysts’ ratings and the latest financial results and corporate guidance that have driven the estimate revisions. Click  here  for Tomi Kilgore’s detailed guide to the wealth of information available for free on MarketWatch quote pages.

For the chip makers, 2022 has been difficult as industry-supporting trends of the previous two years have reversed. Pandemic-era stimulus, consumer habits and supply shortages worked in the industry’s favor or at least supported price increases.

The table above has some notable cuts in EPS and sales estimates:

  • Nvidia Corp.’s /zigman2/quotes/200467500/composite NVDA -1.51% rolling consensus 12-month EPS estimate has declined by 31% since the end of June, while its consensus 12-month sales estimate has fallen by $5.9 billion, or 16%.

  • Intel Corp.’s /zigman2/quotes/203649727/composite INTC -1.41% consensus EPS estimate is down 26% since the end of June, while its sales estimate has dropped $8.1 billion, or 11%.

  • Micron Technology Inc.’s /zigman2/quotes/205710729/composite MU -1.46% EPS estimate has declined 51% since June 30, as its sales estimate has plunged by $10.2 billion, or 27%.

All but four of the largest 12 SOXX companies have had their EPS and sales estimates increase since the end of June.

Looking again at the full SOXX 30, these 12 companies have bucked the trend since the end of June, with consensus earnings and sales estimates both increasing:

/zigman2/quotes/210598361/realtime
US : Nasdaq
2,771.24
-33.46 -1.19%
Volume: 230,392
Dec. 2, 2022 5:16p
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/zigman2/quotes/209255350/composite
US : U.S.: Nasdaq
$ 380.89
-4.35 -1.13%
Volume: 1.04M
Dec. 2, 2022 4:15p
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/zigman2/quotes/204359850/composite
US : U.S.: NYSE
$ 81.50
-1.18 -1.43%
Volume: 10.52M
Dec. 2, 2022 4:00p
P/E Ratio
13.86
Dividend Yield
1.73%
Market Cap
$417.38 billion
Rev. per Employee
$1.10M
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/zigman2/quotes/200467500/composite
US : U.S.: Nasdaq
$ 168.76
-2.59 -1.51%
Volume: 37.14M
Dec. 2, 2022 4:00p
P/E Ratio
71.79
Dividend Yield
0.09%
Market Cap
$415.15 billion
Rev. per Employee
$1.27M
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/zigman2/quotes/200646538/composite
US : U.S.: Nasdaq
$ 540.80
-9.95 -1.81%
Volume: 1.93M
Dec. 2, 2022 4:00p
P/E Ratio
23.57
Dividend Yield
3.03%
Market Cap
$225.32 billion
Rev. per Employee
$1.58M
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/zigman2/quotes/210293876/composite
US : U.S.: Nasdaq
$ 605.71
-5.55 -0.91%
Volume: 719,750
Dec. 2, 2022 4:00p
P/E Ratio
40.29
Dividend Yield
0.93%
Market Cap
$240.86 billion
Rev. per Employee
$711,973
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/zigman2/quotes/202237907/composite
US : U.S.: Nasdaq
$ 177.66
+0.16 +0.09%
Volume: 3.82M
Dec. 2, 2022 4:00p
P/E Ratio
18.61
Dividend Yield
2.79%
Market Cap
$161.24 billion
Rev. per Employee
$651,290
loading...
/zigman2/quotes/206679220/composite
US : U.S.: Nasdaq
$ 125.66
-1.15 -0.91%
Volume: 6.12M
Dec. 2, 2022 4:00p
P/E Ratio
11.05
Dividend Yield
2.39%
Market Cap
$140.86 billion
Rev. per Employee
$866,667
loading...
/zigman2/quotes/208144392/composite
US : U.S.: Nasdaq
$ 74.98
-2.50 -3.23%
Volume: 64.38M
Dec. 2, 2022 4:00p
P/E Ratio
44.93
Dividend Yield
N/A
Market Cap
$120.89 billion
Rev. per Employee
$1.47M
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/zigman2/quotes/203649727/composite
US : U.S.: Nasdaq
$ 29.41
-0.42 -1.41%
Volume: 31.55M
Dec. 2, 2022 4:00p
P/E Ratio
9.08
Dividend Yield
4.96%
Market Cap
$121.38 billion
Rev. per Employee
$574,236
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/zigman2/quotes/209393259/composite
US : U.S.: Nasdaq
$ 106.71
-0.30 -0.28%
Volume: 3.90M
Dec. 2, 2022 4:00p
P/E Ratio
14.35
Dividend Yield
0.97%
Market Cap
$91.80 billion
Rev. per Employee
$955,000
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/zigman2/quotes/201631938/composite
US : U.S.: Nasdaq
$ 168.63
-2.09 -1.22%
Volume: 3.06M
Dec. 2, 2022 4:00p
P/E Ratio
31.99
Dividend Yield
1.80%
Market Cap
$85.88 billion
Rev. per Employee
$491,368
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/zigman2/quotes/205710729/composite
US : U.S.: Nasdaq
$ 54.68
-0.81 -1.46%
Volume: 15.95M
Dec. 2, 2022 4:00p
P/E Ratio
7.07
Dividend Yield
0.79%
Market Cap
$59.45 billion
Rev. per Employee
$640,792
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/zigman2/quotes/208077897/composite
US : U.S.: Nasdaq
$ 457.67
-5.47 -1.18%
Volume: 1.10M
Dec. 2, 2022 4:00p
P/E Ratio
13.12
Dividend Yield
1.51%
Market Cap
$62.42 billion
Rev. per Employee
$1.01M
loading...
/zigman2/quotes/200467500/composite
US : U.S.: Nasdaq
$ 168.76
-2.59 -1.51%
Volume: 37.14M
Dec. 2, 2022 4:00p
P/E Ratio
71.79
Dividend Yield
0.09%
Market Cap
$415.15 billion
Rev. per Employee
$1.27M
loading...
/zigman2/quotes/203649727/composite
US : U.S.: Nasdaq
$ 29.41
-0.42 -1.41%
Volume: 31.55M
Dec. 2, 2022 4:00p
P/E Ratio
9.08
Dividend Yield
4.96%
Market Cap
$121.38 billion
Rev. per Employee
$574,236
loading...
/zigman2/quotes/205710729/composite
US : U.S.: Nasdaq
$ 54.68
-0.81 -1.46%
Volume: 15.95M
Dec. 2, 2022 4:00p
P/E Ratio
7.07
Dividend Yield
0.79%
Market Cap
$59.45 billion
Rev. per Employee
$640,792
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