What happened
Pity the shareholders of Skyworks Solutions (SWKS +1.48%) -- they just can't catch a break.
Three months ago, the maker of semiconductors for cellphones saw its stock tumble nearly 8% in response to a second-quarter earnings report that clearly beat estimates. Today, the exact same thing is happening.
Skyworks, which was expected to earn $2.14 per share on $1.1 billion in third-quarter sales, last night reported EPS of $2.15 on sales of $1.12 billion. It was a small beat, but it was a beat -- yet Skyworks stock was still down 8.6% at noon today.
Image source: Getty Images.
So what
Third-quarter sales grew 52% year over year, nearly as strong as last quarter's 53% growth. What's more, Skyworks didn't only beat analyst targets for pro forma earnings (the $2.15 number noted above -- 72% better than last year). When calculated according to generally accepted accounting principles (GAAP), the company's earnings improvement was even stronger -- $2.02 in EPS in the quarter, a gain of 162% over last year's third quarter!
Now what
"Skyworks delivered record third-quarter results, with strong year-over-year growth in both revenue and earnings per share," CEO Liam Griffin said. And according to management, the future looks great as well. "We expect continued momentum as we execute on strong design wins with our mobile and broad markets customers," Griffin said. Fourth-quarter sales should range from $1.27 billion to $1.33 billion (up about 36% at the midpoint), and pro forma profits are expected to grow by 37%.
Granted, this is slower growth than in either of the last two quarters. But with Skyworks stock trading for under 26 times earnings right now, even 37% growth would seem to imply that the stock is a bit of a bargain -- and should be bought, not sold.
