2014 has been a great year for Skyworks Solutions (SWKS, Financial) investors as the company’s stock has jumped over 120% YTD. With the company constantly delivering excellent quarterly earnings, investors may be confused between holding the stock and taking their profits off the table. However, given the company’s prospects, Skyworks still looks like it has more upside, and investors should continue holding the stock.
A Decent Quarter
The current quarter estimates of Skyworks Solutions looks promising, with continuous progress. 3 estimates of Skyworks Solutions have gone higher in past 30 days. The EPS figure increased to 94 cents a share 30 days ago to $1.09 per share today, a jump of 16.0%.
The current year estimates of Skyworks are also quite strong, as the company is expected to remain profitable on a consistent basis. Also, the stock has elevated with an augment of 24.7%, in the past four weeks, drawing the attention of the investors as well.
Revenues of Skyworks solutions in the quarter were $718.2 million, increasing 51.0% Y-O-Y .The results surpassed consensus estimate of $713 million, while fiscal revenues 2014, was $2,291.5 million, up 28.0% y-o-y, beating the analyst estimate of $2,252 million.
Skyworks solutions continues to get the most out of the global mobile connectivity and also command for higher performance solutions ,athwart the miscellaneous set of vertical markets and Internet of Things.
Gross Profit was reported $324.0 million in the current quarter as compared to $209.1 million in the previous year, while operating income enhanced to $198.1 million from $105.5 million in the preceding year.
With the escalating customer demand and broad operational execution, $3 billion in revenues with non-GAAP earnings per share in the vicinity with $5.00 is expected. The company expects revenue to mount by 52% y-o-y to $770 million in first-quarter fiscal 2015, while margin expansion is expected to be $1.18 of non GAAP earnings per share.
Looking Ahead
Skyworks has shown tremendous performance in their fourth quarter. The company has decided to raise their quarterly dividend to $0.13 per share, showing an increase of 18%. This decision of increase gives strength to their bond with shareholders.
The demand for wireless data is catapult, while the manufacturers improved their presentation to provide users a better know-how i.e. demand video, cloud based services, enterprise data and e-commerce. To endow with better access to the content, launch new services and to increase data, operators are investing in networks and facilitating device upgrades.
The stratagem is to take advantage of this unparalleled stipulate milieu and it’s threefold. The three step plan says: first, to yoke the growth and scale of mobile, capitalizing on mounting analog complexity in the course of custom system solutions, on the other hand customer diversification mitigates split shifts along with OEMs. Second, to enable the next wave of new connecting devices through our industry-leading connectivity solutions and humanizing the budding internet of things prospect. Third, influence broad portfolio of analog solutions and develop into new vertical markets. Q4 design takes away the credit.
Targeting the Emerging Market
In a late press release, Skyworks disclosed various items focusing on minimal effort cell phones for developing markets. Skyworks arrangement of versatile and adaptable front-end arrangements involves multiband power amplifiers, recieving wire switches and differing qualities modules for low to top of the line TD-LTE stages. These incredibly capable arrangements convey enhanced usefulness, help numerous regulation plans and permit cell telephone producers to trim down the quantity of discrete parts.
LTE handsets are expected to double in sales by the beginning of 2015 to 537 million and are expected to grow at a CAGR of 33% in the long haul. Skyworks has taken the right steps to capitalize on this opportunity and ought to benefit with its move as the volume of LTE handsets climbs.
Conclusion
All in all, Skyworks Solutions still present a lot more upside as compared to its rivals like RF Micro Devices (RFMD, Financial) and TriQuint (TQNT). The company’s chips have a competitive advantage and I expect it to continue landing spots in Apple and Samsung. Moreover, the company is diversifying its portfolio, and this should prove to be profitable in the long run, making Skyworks a buy.
