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Let's talk about the popular Skyworks Solutions, Inc. (NASDAQ:SWKS). The company's shares saw a double-digit share price rise of over 10% in the past couple of months on the NASDAQGS. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Today I will analyse the most recent data on Skyworks Solutions’s outlook and valuation to see if the opportunity still exists.
What is Skyworks Solutions worth?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 9.5% below my intrinsic value, which means if you buy Skyworks Solutions today, you’d be paying a reasonable price for it. And if you believe the company’s true value is $83.66, then there’s not much of an upside to gain from mispricing. In addition to this, Skyworks Solutions has a low beta, which suggests its share price is less volatile than the wider market.
What kind of growth will Skyworks Solutions generate?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. However, with a negative profit growth of -2.3% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Skyworks Solutions. This certainty tips the risk-return scale towards higher risk.
What this means for you:
Are you a shareholder? SWKS seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on SWKS for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystalize your views on SWKS should the price fluctuate below its true value.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Skyworks Solutions. You can find everything you need to know about Skyworks Solutions in the latest infographic research report. If you are no longer interested in Skyworks Solutions, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Thank you for reading.