Looking for a great way to play the “Internet of Things” and the coming global tidal wave of mobile phone upgrades to 4G? Look no further than Skyworks Solutions (SWKS – Analyst Report).
Skyworks is an innovator of high performance analog semiconductors with customers across automotive, broadband, wireless infrastructure, energy management, GPS, industrial, medical, military, wireless networking, smartphone and tablet applications. They are probably most recognized as the supplier of RF (radio frequency) chips in Apple (AAPL – Analyst Report) iPhones and other handset and device makers.
When I heard CEO Dave Aldrich speak earlier this year about his company's products helping create the “Internet of Things” I became very interested in the company and its growth potential. The massive connectivity trend to link personal devices to cars, homes, computers, appliances, and networks is just beginning to take off and Skyworks intends to be at the center of it.
Strong Quarter, Great Outlook
Today I'll talk about the core fundamentals of this $12.5 billion tech company and what made them become a Zacks #1 Rank this month. Then we'll cover the big institutional buying that is driving this stock to new highs.
On November 6, SWKS reported a strong September quarter (their Q4 for FY14) and guided the current quarter well above consensus.
They beat an already-positive preannounce from mid-October with non-GAAP EPS of $1.12 and revenues of $718 million, up 51% year-over-year and beating top line estimates by roughly $35 million.
And that revenue surprise not only took full year 2014 top line growth to 28%, but inspired analysts to now project nearly 30% growth for next year too.
That optimism is due in part to the impressive company outlook for 1QFY15 sales/EPS expected at $770M/$1.18, well ahead of the consensus $728M/$1.08.
Much of this growth is due to Apple iPhone6 sales. But the company and analysts see encouraging growth in enough other segments and customers to justify significant estimate hikes for top and bottom lines. They raised the new FY15 consensus from $3.64 to $3.98 and FY16 from $4.19 to $4.72, over 12%.
