SWKS - Embedded Expectations Analysis - 2021 06 04
Skyworks Solutions, Inc. (SWKS:USA) currently trades near recent averages relative to UAFRS-based (Uniform) earnings, with a 15.8x Uniform P/E. At these levels, the market is pricing in expectations for profitability to slightly improve, but management may have concerns about gross margin expansion, Sky5 solution capabilities, and supply chain tightnessSpecifically, management may lack confidence in their ability to sustain mobile revenue growth and gross margin expansion. In addition, they may be overstating the capabilities of their Sky5 solution, the potential of their fab technology investments, and the strength of their current market positioning. Furthermore, management may lack confidence in their ability to manage operating costs and capitalize on the strong demand environment. Finally, management may have concerns about persisting tightness in their supply chain and the diversity of their customer base
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
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