Skyworks (SWKS) Up 0.3% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Skyworks Solutions (SWKS). Shares have added about 0.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Skyworks due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Skyworks' Q3 Earnings Beat Estimates, Revenues Down Y/Y
Skyworks Solutions reported third-quarter fiscal 2023 non-GAAP earnings of $1.73 per share, comfortably beating the Zacks Consensus Estimate of $1.67 but decreasing 29.1% year over year.
Revenues of $1.07 billion decreased 13.1% on a year-over-year basis but beat the consensus mark by 0.07%.
Mobile revenues accounted for 59% of total revenues. Broad markets accounted for 41% of total revenues and benefited from strong automotive (double-digit year-over-year revenue growth), infrastructure and industrial end-markets.
However, the challenging macroeconomic environment and sluggish demand in the Android ecosystem negatively impacted profitability.
Operating Details
Non-GAAP gross margin contracted 370 basis points (bps) on a year-over-year basis to 47.5%, primarily due to factory underutilization on a temporary basis.
Research & development expenses, as a percentage of revenues, increased 110 bps year over year to 13.9%.
Selling, general and administrative expenses increased 100 bps to 7.2% in the reported quarter.
Non-GAAP operating margin contracted 520 bps on a year-over-year basis to 30.5% in the reported quarter.
Balance Sheet & Cash Flow
As of Jun 30, 2023, cash & cash equivalents and marketable securities were $739.5 million compared with $1.06 billion as of Mar 31, 2023.
Long-term debt was $1.49 billion as of Jun 30, 2023, down from $1.99 billion as of Mar 31, 2023.
Cash generated by operating activities was $305.7 million in the quarter under discussion compared with $411.7 million in the previous quarter.
Skyworks paid dividends worth $99 million. The company also raised its quarterly dividend by 10% to 68 cents per share.
Guidance
For the fourth quarter of fiscal 2023, Skyworks expects double-digit revenue and earnings growth on a sequential basis.
The company currently expects revenues between $1.19 billion and $1.24 billion. Earnings are expected to be $2.10 per share at the mid-point of this revenue guidance.
Gross margin is expected between 47% and 48%. Operating expenses are expected to be in the range of $178-$182 million, down 6.5% year over year at the midpoint.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
VGM Scores
Currently, Skyworks has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Skyworks has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Skyworks belongs to the Zacks Semiconductors - Radio Frequency industry. Another stock from the same industry, Qorvo (QRVO), has gained 0.9% over the past month. More than a month has passed since the company reported results for the quarter ended June 2023.
Qorvo reported revenues of $651.16 million in the last reported quarter, representing a year-over-year change of -37.1%. EPS of $0.34 for the same period compares with $2.25 a year ago.
Qorvo is expected to post earnings of $1.77 per share for the current quarter, representing a year-over-year change of -33.5%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
Qorvo has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.
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