Is United Microelectronics Corporation (UMC) positioned for future growth?

United Microelectronics Corporation (NYSE: UMC) stock fell -2.43% on Friday to $6.02 against a previous-day closing price of $6.17. With 9.09 million shares changed hands, the volume of the stock remained heavier than its average volume of 8.5 million shares. During the session, the Semiconductors company that operates in wider Technology sector, reached to the highest price of $6.15 whereas the lowest price it dropped to was $6.01. The 52-week range on UMC shows that it touched its highest point at $11.89 and its lowest point at $6.16 during that stretch. It currently has a 1-year price target of $7.91. With its current market cap of 15.26 billion, UMC has annualized dividend of $0.80 while the current yield stands at 13.36%. Beta for the stock currently stands at 1.08.

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Price Performance and Earnings:

Stock performance is one of the indicators that investors use to determine whether they will profit from a stock. The price performance of UMC was down-trending over the past week, with a drop of -5.20%, but this was down by -10.55% over a month. Three-month performance dropped to -15.09% while six-month performance fell -29.73%. The stock lost -45.29% in the past year, while it has lost -45.11% so far this year. A look at the trailing 12-month EPS for UMC yields 0.84 with Next year EPS estimates of 0.94. For the next quarter, that number is 0.30. This implies an EPS growth rate of 90.90% for this year and -20.59% for next year. EPS is expected to grow by 34.10% annually over the next five years; however, over the past five years, the company experienced an annual growth rate of 47.80%.

Float and Shares Shorts:

At present, 2.54 billion UMC shares are outstanding with a float of 2.25 billion shares on hand for trading. On Jul 14, 2022, short shares totaled 57.22 million, which was 2.29% higher than short shares on Jun 14, 2022. In addition to Mr. Jia Cong Hung as the firm’s Chairman & Chief Strategy Officer, Mr. Jason S. Wang serves as its Pres & Representative Director.

Institutional Ownership:

Through their ownership of 5.23% of UMC’s outstanding shares, institutional investors have minority control over the company. Other institutions hold 3.76% of UMC, in contrast to 1.38% held by mutual funds. Shares owned by individuals account for –. As the largest shareholder in UMC with 0.64% of the stake, The Vanguard Group, Inc. holds 15,969,852 shares worth 15,969,852. A second-largest stockholder of UMC, BlackRock Fund Advisors, holds 10,877,268 shares, controlling over 0.44% of the firm’s shares. Arrowstreet Capital LP is the third largest shareholder in UMC, holding 10,646,729 shares or 0.43% stake. With a 0.44% stake in UMC, the Vanguard Emerging Markets Stock I is the largest stakeholder. A total of 11,087,458 shares are owned by the mutual fund manager. The iShares Semiconductor ETF, which owns about 0.26% of UMC stock, is the second-largest Mutual Fund holder. It holds 6,519,329 shares valued at 43.22 million. Vanguard FTSE All World holds 0.11% of the stake in UMC, owning 2,820,176 shares worth 18.7 million.

An Overview of Recent Financials:

Understanding a company as a customer does not mean you will understand it as an investor. The wise investor uses quantitative research to analyze metrics such as revenue, net income, and earnings. In its fiscal quarter reported on Jun 29, 2022, UMC reported revenue of $72.06B and operating income of $27.85B. Over the past year, revenue came in at $250.48B while operating income stood at $83.25B. It generated $21.33B net income for the quarter, which came to $70.01B over the last twelve months. The EBITDA in the recently reported quarter was $37.34B and diluted EPS was $8.50. EBITDA for the full year was $127.47B.

Analysts Ratings:

Reading analyst opinions is an effective way to decide where to invest, and there are several opinions available for UMC since 3 analysts follow the stock currently. There are 0 analysts who recommend BUY ratings, while 0 suggest SELL ratings. Of the remaining analysts, 1 believe that the stock is worth HOLDING, 1 give it an OVERWEIGHT rating, and 1 thinks that it’s UNDERWEIGHT. In the same way, a target price assigned to a stock can also reveal much about its potential. With UMC analysts setting a high price target of $6.10 and a low target of $6.10, the average target price over the next 12 months is $6.10. Based on these targets, UMC could surge 1.33% to reach the target high and rise by 1.33% to reach the target low. Reaching the average price target will result in a growth of 1.33% from current levels.

EPS: Estimates vs Actual

It is also common to use earnings estimates to evaluate a firm’s growth potential and to determine trading strategy. UMC will report FY 2022 earnings on 01/25/2023. Analysts have provided yearly estimates in a range of $1.21 being high and $0.95 being low. For UMC, this leads to a yearly average estimate of $1.14. The earnings surprise of a firm occurs when the actual results change from the consensus earnings estimate. United Microelectronics Corporation surprised analysts by -$0.01 when it reported $0.29 EPS against a consensus estimate of $0.30. The surprise factor in the prior quarter was $0.01. Based on analyst estimates, the high estimate for the next quarter is $0.33 and the low estimate is $0.30. The average estimate for the next quarter is thus $0.32.

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