Skyworks Solutions reported strong earnings results on July 17 after a day when jet planes and bombs were falling from the sky. It is a reminder that regardless of the tragic geopolitical situation, this is still earnings season.
Skywork's stock traded up more than 14% on the results.
Skyworks Solutions (NASDAQ:SWKS) is a Woburn, Mass.-based manufacturer of high-performance analog semiconductor chips. Skyworks growth is coming from the increased data content requirements for wireless, internet-enabled smart devices. It is also a key supplier for Apple's (NASDAQ:AAPL) iPhone.
Skyworks's reported third-quarter results of 83 cents which was 3 cents ahead of the FactSet consensus. Revenues also came in higher at $587 million versus the $570.1 million consensus estimate. More important, company guidance and the tone on the earnings call was extremely optimistic, with the company guiding earnings to $1.00 versus the 87 cents street consensus and revenues to $680 million versus the street's $605 million estimates.
While most analysts are expecting Skyworks to supply RF chips for Apple's upcoming iPhone 6, company management was also championing its ability to expand into many other product areas such as wearables, automotive and medical devices as part of the Internet of Things.
Skyworks Solutions is another good company in the robust semiconductor segment of the technology sector. It’s also a company I wrote about in 2011 in my Best Stocks Now book on page 136. So let's dig deeper using my Best Stocks Now analysis.
Best Stocks Now Analysis
Skyworks Solutions is a midcap technology stock with a market cap of $8.8 billion and annual revenues of $1.9 billion.
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The stock, like many semiconductor names, is reasonably valued with a forward P/E ratio of only 13.2X earnings. This represents a huge discount to its 5-year annual earnings growth rate of 17.08% giving it a PEG ratio of only .78 and a Value Grade of A.
Skywork's reasonable valuation belies the fact that it has been a huge performer over the last few years. Before this recent move, the stock was already up almost 63% year-to-date and more than 100% over the last year.
Skyworks is currently ranked 194 in the 3,800+ Best Stocks Now universe, but is likely to move up on the company's latest results. I initiated a long position in the stock back in mid-June. Cheap semis like Skyworks were looking good back then and still make sense as strong fundamentals coupled with reasonable valuation should continue to be rewarded going forward.
Skyworks is in a "sweet spot" of the market with upside coming from Apple's iPhone refresh and huge growth in other internet-enabled devices. It is no wonder that Skyworks is soaring again today on these great results.
By Bill Gunderson
DISCLOSURE: Bill Gunderson owns shares of Skyworks Solutions (SWKS) in his personal account.
Source:http://www.marketwatch.com/
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