SWKS - Embedded Expectations Analysis - 2019 05 21
Skyworks Solutions Inc. (SWKS:USA) currently trades below recent averages relative to UAFRS-based (Uniform) Earnings, with a 10.8x Uniform P/E, implying bearish expectations for the firm. Furthermore, management has concerns about their Qualcomm partnership, market softness in China, and their technology capabilities.Specifically, management may lack confidence in their ability to meet free cash flow and EPS expectations, and interoperate with Qualcomm to deliver compelling end solutions and drive business wins. In addition, they may be concerned about softness in China, the potential of their millimeter-wave technology investments, and their ability to meet 5G technology requirements. Moreover, they may be exaggerating their market leadership and experience, their RF technology capabilities, and the design win potential of new products.
Skyworks Solutions is a provider of analog semiconductors that connect people, places, and things, spanning a number of applications within the aerospace, automotive, broadband, cellular infrastructure, connected home, industrial, medical, military, smartphone, tablet and wearable markets. The company's product portfolio consists of various solutions, including: amplifiers, antenna tuners, attenuators, circulators/isolators, wireless analog system on chip, direct current (DC)/DC converters, demodulators, detectors, diodes, directional couplers, diversity receive modules, filters, front-end modules, hybrid, light emitting diode drivers, low noise amplifiers, mixers, and modulators.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
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