Unveiling the Investment Potential of Skyworks Solutions Inc (SWKS): A Comprehensive Analysis ...
Skyworks Solutions Inc (NASDAQ:SWKS) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at 97.55, Skyworks Solutions Inc has witnessed a decline of 1.84% over a period, marked against a three-month change of -5.82%. A thorough analysis, underlined by the GuruFocus Score Rating, suggests that Skyworks Solutions Inc is well-positioned for substantial growth in the near future.
Understanding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
1. Financial strength rank: 8/10
2. Profitability rank: 9/10
3. Growth rank: 9/10
4. GF Value rank: 9/10
5. Momentum rank: 8/10
Each one of these components is ranked and the ranks also have positive correlation with the long term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. With high ranks in financial strength, profitability, and growth, and slightly lower ranks in GF value and momentum, GuruFocus assigned Skyworks Solutions Inc the GF Score of 95 out of 100, which signals the highest outperformance potential.
Delving into Skyworks Solutions Inc's Business
Skyworks Solutions Inc, with a market cap of $15.55 billion and sales of $4.96 billion, is a leading producer of semiconductors for wireless handsets and other devices that enable wireless connectivity. Its main products include power amplifiers, filters, switches, and integrated front-end modules that support wireless transmissions. Skyworks' customers are mostly large smartphone manufacturers, but the firm also has a growing presence in nonhandset applications such as wireless routers, medical devices, and automobiles. The company's operating margin stands at 26.38, reflecting its efficient operations.
Financial Strength Analysis
According to the Financial Strength rating, Skyworks Solutions Inc's robust balance sheet exhibits resilience against financial volatility, reflecting prudent management of capital structure. The Interest Coverage ratio for Skyworks Solutions Inc stands impressively at 19.73, underscoring its strong capability to cover its interest obligations. With an Altman Z-Score of 6.03, Skyworks Solutions Inc exhibits a strong defense against financial distress. With a favorable Debt-to-Revenue ratio of 0.35, Skyworks Solutions Inc's strategic handling of debt solidifies its financial health.
Profitability Rank Breakdown
The Profitability Rank shows Skyworks Solutions Inc's impressive standing among its peers in generating profit. Furthermore, Skyworks Solutions Inc's Gross Margin has seen a consistent rise over the past five years, as evidenced by the data: 2019: 47.49; 2020: 48.06; 2021: 49.18; 2022: 47.48; 2023: 54.58. This trend underscores the company's growing proficiency in transforming revenue into profit. Skyworks Solutions Inc's strong Predictability Rank of 3.0 stars out of five underscores its consistent operational performance, providing investors with increased confidence.
Growth Rank Breakdown
Ranked highly in Growth, Skyworks Solutions Inc demonstrates a strong commitment to expanding its business. The company's 3-Year Revenue Growth Rate is 20.2%, which outperforms better than 69.41% of 863 companies in the Semiconductors industry. Moreover, Skyworks Solutions Inc has seen a robust increase in its earnings before interest, taxes, depreciation, and amortization (EBITDA) over the past few years. Specifically, the three-year growth rate stands at 21.1, and the rate over the past five years is 10.6. This trend accentuates the company's continued capability to drive growth.
Conclusion
Given Skyworks Solutions Inc's strong financial strength, profitability, and growth metrics, the GuruFocus Score Rating highlights the firm's unparalleled position for potential outperformance. This analysis underscores the company's robust financial health, consistent profitability, and impressive growth trajectory, making it a compelling investment opportunity. GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
This article first appeared on GuruFocus.
