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Skyworks Solutions (SWKS) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research

Skyworks Solutions (SWKS) closed at $111.86 in the latest trading session, marking a +0.33% move from the prior day. The stock outpaced the S&P 500's daily gain of 0.01%. Elsewhere, the Dow gained 0.01%, while the tech-heavy Nasdaq added 0.2%.

Heading into today, shares of the chipmaker had gained 12.9% over the past month, outpacing the Computer and Technology sector's gain of 2.57% and the S&P 500's gain of 2.67% in that time.

Investors will be hoping for strength from SWKS as it approaches its next earnings release. The company is expected to report EPS of $1.65, down 9.84% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $880.29 million, down 9.44% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $6.37 per share and revenue of $3.44 billion, which would represent changes of +3.24% and +1.79%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for SWKS. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 1.81% lower. SWKS is holding a Zacks Rank of #3 (Hold) right now.

Looking at its valuation, SWKS is holding a Forward P/E ratio of 17.5. Its industry sports an average Forward P/E of 18.89, so we one might conclude that SWKS is trading at a discount comparatively.

Investors should also note that SWKS has a PEG ratio of 1.22 right now. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. Semiconductors - Radio Frequency stocks are, on average, holding a PEG ratio of 1.48 based on yesterday's closing prices.

The Semiconductors - Radio Frequency industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 43, putting it in the top 17% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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