Skyworks Solutions (SWKS, Financial) delivered strong results recently. A solid 59% increase in year over year revenue is a clear indication that the stock has a long way to go in the long term. Looking ahead, Skyworks is expected to accelerate its performance.
Focus on key initiatives
The company is now focusing on various key initiatives to drive its profitability further. It is now capitalizing on various industry dynamics in order to expand its opportunities in the market place. The growth in these marketplaces have created many content opportunities due to which the company is seeing dramatic increase in analog complexity. To be more competent in the market, Skyworks is now finding ways to make closer engagements with the customers by introducing higher value solutions across the board.
Skyworks is majorly focusing on those areas which had been its star performers in the past. It seems well in position to capitalize the growing opportunities by providing integrated RF and analog solutions. This will be a great attraction to its customers as it will enable its customers to navigate increasingly more complex design challenge which will further help the company to improve its growth and financial performance.
New products
Moreover, the company is also bringing in new products in the league to hold a competitive edge in the market. Under this, mobile segment stands as a most promising venture for Skyworks as it has received several design wins in the mobile segment including various diversity received modules in the smartphone platform at several OEMs including Samsung. This seems to open a new growth avenue for Skyworks in future.
Skyworks has recently brought in SkyLITE which is a highly integrated system supporting MediaTek’s latest SoC reference design across multiple smartphone platforms. Besides this across Xiaomi’s leading smartphone platforms the company has also introduced new switching and connectivity modules. In addition, it has also succeeded in capturing a suite of 10 Skyworks products for Cisco’s latest gateway solution. All these are the clear indication of the company’s success at impressive levels.
The growing use of technology is also creating opportunities Skyworks. The concept of connected car, automated home, wearable technologies and new categories such as drone are utilizing new technologies. These are also some concrete opportunities for Skyworks on which it can count on.
Conclusion
Skyworks has laid a solid track and trailing at 29.02 and the stock looks reasonable. The forward P/E of 15.53 also indicates good earnings growth in the near term. Seeing the growth momentum the long term aspects of the company also looks healthy. For the next five years its earnings are growing at a CAGR of 20.62%, which is better than industry average of 11.55%, making the stock even more impressive. Hence, in my opinion, Skyworks is a good pick and the investors should definitely include it in their portfolio.
