Skyworks Solutions (SWKS, Financial) is benefiting from the enhanced usage of different types of wireless data with applications increasingly utilizing the benefit of connectivity. Further, it is witnessing a remarkable expansion in analog complexity propelled by enhanced performance requests and such market activities have developed superior content prospects, increased engagements with its customers and enhanced value solutions throughout the industry, reducing the number of proficient competitors.
A strong product portfolio will power growth
Skyworks has a unique portfolio of advanced well-built RF and analog solutions that allow its customers to easily steer through difficult design challenges leading to an expanding market growth and better financial returns to its key investors.
The unique and innovative technology development capabilities of Skyworks have allowed it to lead the competition and attract greater shareholders.
For the quarter, Skyworks reported $1.26 of EPS, an increase of 88% during the same period last year. It collected $383 million of operating cash flows and concluded the quarter with more than a billion dollars of cash on hand and having no debt.
Skyworks' widening market reach, its innovative product developments and superior set of solutions allow it to alleviate these changing patterns, highlights its diversification capabilities. Skyworks significant mobile wins comprises of a range of accepted modules in Smartphone platforms for many OEM customers like Samsung.
The healthy and stable balance sheet of Skyworks coupled with its key technology development capabilities encourages it to increasingly deliver superior innovation.
A closer look at key products
Skyworks also introduced SkyLiTE which are hugely incorporated systems enabling the new SoC reference design of MediaTek across several Smartphone platforms. Connectivity and switching modules are extremely popular for Xiaomi’s major Smartphone platforms. Globally, Skyworks has grabbed a key opportunity to serve Cisco (CSCO, Financial) with a set of 10 Skyworks products leveraged for Cisco’s newest home gateway solution enabling several cable operators.
Skyworks is developing several analog devices on the key telematics platform leveraged for General Motors (GM, Financial) vehicles, greater reliability avionics systems and analog ICs for Talus, Zigbee-linked units for intelligent light bulbs with LG, Philips and others, Restricted area connectivity solutions for Fire TV and Echo streaming media devices at the major online retailer.
The newly developed mobile platform technologies of Skyworks are gaining expanding traction among the key technology behemoths and thus bringing in more revenue streams for the company.
Skyworks announced enhanced design wins in CES with development in wearable technologies, the automated home, the connected car and earlier unexpected fresh categories such as drones all leveraging advanced technologies like close field protocols such as Bluetooth and ZigBee, local area networking and 4G such as TPS.
The increasing demand for Cloud data, streaming services, social media and any time access to on-demand content are believed to be at the center for the performance of high-end connected devices. In addition, there’s an expanding market opportunity for implementing 802.11AC, acceptance of superior uplink architectures and rising brand proliferation.
The rising technical complexity is believed to offer an enhanced expansion opportunity for Skyworks by developing newer products and implementing unique services.
Skyworks is eyeing significant growth opportunities for 4G devices in markets such as Eastern Europe, Latin America, India, China where there’s lower rate of broadband penetration with higher population densities. The current accelerated technology adoption depicts that Smartphone supply into India only is estimated to expand at a compounded rate of 40% until the year 2020.
According to the market analysts, the number of connected devices is forecasted to expand significantly in the coming five years. The machine-to-machine connections are expected to enhance four times until 2020 averaging approximately 800 million connections and providing greater growth opportunities in the connected home in wearable and different markets.
The accelerated adoption of advanced mobile technologies across the globe puts Skyworks in a robust position to innovate and expand.
Skyworks is growing fast into fresh markets. It is investing significantly to expand its market reach into conventional analog divisions such as industrial, medical and automotive. These markets are believed to be extremely huge growth markets for Skyworks with improved product life cycles, lesser competitors and enhanced margins.
Skyworks is expected to be strategically positioned with the worldwide expansion of connectivity for several applications and by expanding the usage of analog-rich content which is essential to run the latest devices.
The planned investments of Skyworks into developing innovative technologies across a range of verticals are estimated to put the company ahead of the competition.
Moving ahead, Skyworks is developing next-generation over-the-top set top boxes which deliver superior WiFi media performance and enable ultra-high definition/4K resolution. These new innovative products are expected to attract newer customers, driving accelerated company growth.
Conclusion
Overall, the investors are advised to invest into Skyworks Solutions Inc. looking at the attractive valuation levels with the trailing P/E and forward P/E ratios of 28.36 and 14.93 respectively. The PEG ratio of 0.81 is better than the industry’s average of 0.96, suggesting impressive company growth. The profit margin of 21.55% supports the growth story. The superior growth for Skyworks is enabled by its robust balance sheet with strong total cash of $1.05 billion with no net debt.
