In response to reporting a good start to the first year, shares of Skyworks Solutions (NASDAQ:SWKS), a manufacturer of specialty analog semiconductor chips, rose 10% as of 10:30 a.m. EST on Monday.
Here's a quick review of the headline numbers from the quarter:
- Revenue jumped 15% to $1.052 billion. That was a smidge ahead of management's guidance and met Wall Street's expectation.
- Skyworks' non-GAAP gross and operating margins expanded during the period, enabling net income to rise 23%. Non-GAAP EPS grew by 24% to $2.00 per share thanks to the effects of stock buybacks. That exceeded management's guidance and the consensus forecast among analysts by $0.08.
- Managment repurchased 1.7 million shares of common stock during the quarter.
- Skyworks' Board authorized a new $1 billion stock repurchase plan. In addition, strong business momentum and the recent changes to the tax code allowed the company to increase its targeted cash return rate to shareholders. The new range is 60% to 75% of free cash flow, which is a significant increase from its prior range of 40% to 50%.
Turning to guidance, here's what CFO Kris Sennesael expects to happen in the upcoming quarter:
- Revenue will grow approximately 7% to $910 million.
- Earnings per share will grow about 15% to $1.60.
CFO Sennesael also shared the following bullish commentary with investors on its conference call related to the company's expectations for the remainder of the year:
Based on our expanding reach within flagship platforms, and with design win momentum across broad markets, we expect accelerated top-line growth and further margin improvements throughout the balance of the fiscal and calendar year.
Given the upbeat results and bullish commentary, it isn't hard to figure out why shareholders are having a good day.
As usual, CEO Liam Griffin also called out a number of Skyworks-powered products that are powering the company's growth. Specifically, he touted that the company's products can be found in Amazon's new Kindle lineup, Comcast's new home gateway, and Alphabet's new home alarm systems. What's more, he also stated that the company secured a number of "massive" design wins with carriers across Europe and China. Importantly, these expanding business relationships should help to dampen the company's huge dependence on its biggest customer, Apple.
In total, Skyworks' financial statements are flourishing and the company continues to have success in winning new business. When adding in the recent expansion of the company's capital return program, Skyworks' investors appear to have plenty of reasons to remain bullish.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Brian Feroldi owns shares of Alphabet (A shares), Alphabet (C shares), Amazon, and Apple. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Apple, and Skyworks Solutions. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool recommends Comcast. The Motley Fool has a disclosure policy.