Is Skyworks Solutions, Inc. Destined for Greatness?

Let's see what the numbers say about Skyworks (SWKS).

Jun 7, 2014 at 9:00PM

Investors love stocks that consistently beat the Street without getting ahead of their fundamentals and risking a meltdown. The best stocks offer sustainable market-beating gains, with robust and improving financial metrics that support strong price growth. Does Skyworks Solutions, Inc. (NASDAQ:SWKS) fit the bill? Let's take a look at what its recent results tell us about its potential for future gains.

What we're looking for
The graphs you're about to see tell Skyworks' story, and we'll be grading the quality of that story in several ways:

  • Growth: Are profits, margins, and free cash flow all increasing?
  • Valuation: Is share price growing in line with earnings per share?
  • Opportunities: Is return on equity increasing while debt to equity declines?
  • Dividends: Are dividends consistently growing in a sustainable way?

What the numbers tell you
Now, let's take a look at Skyworks' key statistics:

SWKS Total Return Price Chart

SWKS Total Return Price data. Source: YCharts.

Passing Criteria

3-Year* Change


Revenue growth > 30%



Improving profit margin



Free cash flow growth > Net income growth

216.4% vs. 67%


Improving EPS



Stock growth (+ 15%) < EPS growth

34% vs. 63.4%


Source: YCharts. * Period begins at end of Q1 2011.

SWKS Return on Equity (TTM) Chart

SWKS Return on Equity (TTM) data. Source: YCharts.

Passing Criteria

3-Year* Change


Improving return on equity



Declining debt to equity

No debt


Source: YCharts. * Period begins at end of Q1 2011.

How we got here and where we're going
We took a look at Skyworks last year, and it now comes through with flying colors to rack up a rare perfect score in its second assessment -- although it only required one more pass to get there. In the process, Skyworks has given shareholders a near double, as its stock price is 80% higher today than it was when we looked at it in 2013. The company's now recovered from a downturn in its free cash flow that lasted through most of 2012, which allowed it to capture the only passing grade out of its reach last year. However, Skyworks' revenue and net income growth rates have moderated since last year, and this could raise some concerns for shareholders if the slowdown continues. Will Skyworks regain the mojo in its growth momentum this year? Let's dig a little deeper to find out.

Skyworks recently crushed Wall Street's estimates on both top and bottom lines for its fiscal second quarter due to its strong supply agreements with smartphone leaders Samsung and Apple (NASDAQ:AAPL). Skyworks also provided promising third-quarter guidance, which rides on the strength of its mobile connectivity portfolio. My fellow writer Amal Singh notes that the company is poised to capitalize on its new 802.11ac Wi-Fi chip, which can support set-top boxes, 4G LTE services, and super-high-def televisions. Skyworks appears to be targeting the LTE handset market as global telecom providers have been aggressively building out LTE networks in over 50 international markets, particularly in rapidly growing emerging markets such as China. Apple's recent deal with China Mobile (NYSE: CHL) will give it access to more than 700 million subscribers, which should further expand Skyworks' addressable market.

According to Credit Suisse, LTE handset volumes will double to 537 million units this year, and will grow by another 33% per year for the next several years, which is clearly a monster opportunity for Skyworks -- and for its rivals TriQuint (NASDAQ:TQNT) and RF Micro Devices (NASDAQ:RFMD). These competitors recently agreed on a merger to secure more business from mobile top dogs Apple and Samsung. Apple and Samsung together accounted for nearly half of Skyworks' revenue in fiscal 2013, so this is clearly a threat that could diminish its otherwise-sterling growth prospects.

My fellow writer Harsh Chauhan notes that Skyworks' 802.11ac chips have also been gaining traction in Internet of Things applications, which is projected to become a $19 trillion worldwide market in the coming years. According to Morgan Stanley, there will be 75 billion connected devices by 2020, providing a huge opportunity for Skyworks thanks to its strong relationship with Google and its newly acquired smart-home development subsidiary Nest.

Skyworks has also joined hands with Panasonic in a joint venture focused on the design and development of high-performance wireless-signal filters, providing another angle of entry into the mobile connectivity and Internet of Things markets. Skyworks will contribute $148.5 million in cash for a 66% stake in the joint venture, while Panasonic retains the other third of the company. Earlier this year, Skyworks also introduced other products to bolster its position in smartphones: antenna switch solutions for high-speed (LTE) wireless connectivity and a dual-LED flash driver for smartphone cameras called TrueFlash. According to Gartner, 90% of smartphones worldwide -- an estimated 2.2 billion units -- will sport cameras by the end of next year, so Skyworks now has a chance to earn placement in many millions of new smartphones in two different ways -- Wi-Fi connectivity and camera control.

Putting the pieces together
Today, Skyworks has many of the qualities that make up a great stock, but no stock is truly perfect. Digging deeper can help you uncover the answers you need to make a great buy -- or to stay away from a stock that's going nowhere.

Are you ready for this $14.4 trillion revolution?
Have you ever dreamed of traveling back in time and telling your younger self to invest in Apple? Or to load up on at its IPO and just keep holding? We haven't mastered time travel, but there is a way to get out ahead of the next big thing. The secret is to find a small-cap "pure play" and then watch as the industry -- and your company -- enjoys those same explosive returns. Our team of equity analysts has identified one stock that's ready for stunning profits with the growth of a $14.4 TRILLION industry. You can't travel back in time, but you can set up your future. Click here for the whole story in our eye-opening report.

Alex Planes has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Apple and Google (A and C shares). It owns shares of TriQuint Semiconductor. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers