SWKS - Embedded Expectations Analysis - 2021 03 24
Skyworks Solutions, Inc. (SWKS:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) earnings, with a 16.5x Uniform P/E. At these levels, the market is pricing in bearish expectations for the firm, and management may have concerns about revenue growth, 5G product launches, and supply chain disruptionsSpecifically, management may lack confidence in their ability to continue outperforming their revenue guidance, sustain audio solutions business momentum, and capitalize on arising opportunities from C-band auctions. Furthermore, they may be exaggerating the integration capabilities of the Sky 5 platform and the potential of 5G and wireless protocols adoption. Moreover, management may have concerns about the sustainability of their strong 5G launches, the complexity of 5G technology, and their decision to implement a new $2 billion share buyback program. Furthermore, they may be concerned about potential disruptions to the supply chain and the performance of their large customers. Finally, management may be overstating the potential of their investments in capital and scale and the strength of their non-cellular related markets
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
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- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
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