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Skyworks Solutions Falls in After-Hours Trading Despite 4th-Quarter Earnings Beat

After the closing bell on Tuesday, Skyworks Solutions Inc. (NASDAQ:SWKS) issued its financial results for the final quarter and full year of fiscal 2019, which ended on Sept. 27.

The U.S. semiconductor company beat analysts' expectations on GAAP earnings by 1 cent, having posted $1.22 earnings per diluted share. This reflects a 23% rise year over year. Net revenue for the quarter was $827.4 million. The top line declined almost 18% year over year, but it topped projections by $3.33 million.

Regardless of the earnings and revenue beat, shares of Skyworks Solutions fell $4.71 (or 4.64%) to a price of $96.88 per unit in after-hours trading.

"Skyworks delivered solid financial results in the fourth fiscal quarter, closing a year that saw extraordinary market volatility and change," said President and CEO Liam K. Griffin.

However, the following data show some signs of deterioration in the profitability of Skyworks' operations. The GAAP operating income dropped 31.2% to $233.9 million in the fourth quarter, down from $340.1 million in the prior-year quarter. This marks a drop of 546 basis points in the GAAP operating income margin rate of 28.27%. For the year-ago quarter, the GAAP operating margin rate was 33.73%.

Regarding expectations for the upcoming quarters, Griffin said:

"Looking ahead, we are well positioned to execute on our mission of delivering compelling 5G solutions across a growing and diverse suite of customers and markets. Our systems-level approach, highlighted by our Sky5(R) platform, now includes strategic capabilities in BAW, Wi-Fi 6, MIMO and custom diversity receive. Collectively, these solutions are unleashing the true potential of 5G - successfully providing a range of options to our customers while increasing the value and utility of each usage case. We are in the early innings of this substantial technology inflection, as we translate these dynamics into sustainable growth and profitability."

For the first quarter of fiscal 2020, the company said that it expects pro forma earnings per share of $1.65 versus consensus estimates of $1.61, while revenue is projected to fall in the $870 million to $890 million range compared to expectations of $873.26 million.

Skyworks Solutions also released figures for the entire year of fiscal 2019, with the following highlights: revenue of $3.38 billion shows an increase of 12.7% from full fiscal year 2018, while GAAP earnings of $4.89 per diluted share mark a 2.4% decline from the previous year.

Additionally, in full fiscal 2019, operations produced cash inflows of $1.37 billion versus cash inflows of $1.26 billion in full fiscal 2018. Funds allocated to capital expenditures were $398.4 million compared to $422.3 million in the previous year.

As of Sept. 27, the balance sheet of the semiconductor had $1.08 billion in cash on hand and short-term securities, and its total equity was worth $4.12 billion.

In full fiscal 2019, Skyworks Solutions used $954.2 million of its cash for dividends (28.7% of the total) and shares repurchase programs (71.3% of the total).

Currently, the US semiconductor pays a 44 cents quarterly dividend per common share. The next payment will be sent out to its shareholders on Dec. 24. In order to benefit, investors must be on the company's record not later than Dec. 3. The ex-dividend date is Dec. 2. The payment generates a forward dividend yield of 1.75% based on Tuesday's closing share price of $101.59.

The share price has risen 52% so far this year. The stock has a market capitalization of $17.44 billion and a 52-week range of $60.12 to $102.87.

Analysts suggest an overweight rating with an average target price of $91.08.

Disclosure: I have no positions in any securities.

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This article first appeared on GuruFocus.