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Earnings Beat: Skyworks Solutions, Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

Simply Wall St

As you might know, Skyworks Solutions, Inc. (NASDAQ:SWKS) recently reported its quarterly numbers. The result was positive overall - although revenues of US$896m were in line with what analysts predicted, Skyworks Solutions surprised by delivering a statutory profit of US$1.50 per share, modestly greater than expected. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for Skyworks Solutions

NasdaqGS:SWKS Past and Future Earnings, January 27th 2020

Taking into account the latest results, the current consensus from Skyworks Solutions's 25 analysts is for revenues of US$3.51b in 2020, which would reflect a reasonable 6.4% increase on its sales over the past 12 months. Statutory earnings per share are expected to climb 18% to US$5.68. Yet prior to the latest earnings, analysts had been forecasting revenues of US$3.44b and earnings per share (EPS) of US$5.53 in 2020. So there seems to have been a moderate uplift in analyst sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.

It will come as no surprise to learn that analysts have increased their price target for Skyworks Solutions 13% to US$130 on the back of these upgrades. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Skyworks Solutions at US$150 per share, while the most bearish prices it at US$86.00. This shows there is still quite a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

It can also be useful to step back and take a broader view of how analyst forecasts compare to Skyworks Solutions's performance in recent years. Analysts are definitely expecting Skyworks Solutions's growth to accelerate, with the forecast 6.4% growth ranking favourably alongside historical growth of 4.3% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 8.2% per year. It seems obvious that, while the future growth outlook is brighter than the recent past, analysts also expect Skyworks Solutions to grow slower than the wider market.

The Bottom Line

The biggest takeaway for us is that analysts upgraded their earnings per share estimates, showing a clear improvement in sentiment around Skyworks Solutions. Fortunately, they also upgraded their revenue estimates, although our data indicates sales are expected to perform worse than the wider market. Analysts also increased their price target, suggesting that they believe the intrinsic value of the business has increased.

While that could be true, we wouldn't be too quick to come to a conclusion on Skyworks Solutions. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Skyworks Solutions analysts - going out to 2022, and you can see them free on our platform here.

Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

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