This chipmaker turned in a terrific performance in 2019 thanks to the improving fortunes of its leading customer, Apple, the deployment of 5G networks, and the gradual improvement in its financial performance. However, that didn’t prevent…
Skyworks Solutions’ (NASDAQ:SWKS) investors from taking some money off the table after the company’s latest quarterly results.
Skyworks top line dropped year over year, and its earnings shrank. The company’s revenue fell nearly 8% year over year, while net income was down close to 10% annually. The surprising thing is that there was nothing unexpected about the chipmaker’s latest performance.
Wall Street was looking for $880.6 million in first-quarter revenue, and Skyworks delivered $896 million. Adjusted earnings of $1.86 per share also trumped the consensus estimate of $1.83 per share. What’s more, the chipmaker’s outlook was much better than the market’s expectations as it prepares to make a return to top- and bottom-line growth.
However, Skyworks stock headed south after the earnings report. Savvy investors should consider this a buying opportunity as the chipmaker could still turn out to be a top growth stock this year, and it’s now selling on the cheap.
Investors shouldn’t ignore these tailwinds
Demand for Skyworks’ connectivity chips should get better this year thanks to the impending smartphone upgrade cycle, which will be driven by the deployment of 5G (fifth-generation) wireless networks. As it turns out, 5G networks are expected to gain critical mass in 2020, with deployments gaining pace across the globe.
More importantly, 5G smartphone sales are expected to more than double in 2021 to 489 million units, according to Gartner. This anticipated turnaround in the smartphone space should come as a huge relief for Skyworks as the mobile market accounts for 73% of the company’s overall revenue.
Smartphone shipments dropped 2% in 2019, and that was enough to dent Skyworks’ financial performance. But now that a turnaround is in the cards, Skyworks’ outlook is getting better. The company anticipates $1.46 per share in earnings this quarter on revenue of $810 million, according to the mid-point of its guidance range. That’s almost identical to the prior-year period’s numbers.
Analyst estimates compiled by Yahoo! Finance predict that Skyworks’ top line could grow nearly 4% this fiscal year. The chipmaker’s financial performance is expected to pick up a few notches in fiscal 2021, with forecasted revenue growth of over 11%. It won’t be surprising to see…
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