I haven’t published any analysis summaries in a while on here so felt it was time again 
Introduction
Skyworks first came to my attention when I was looking at the entire semiconductor a while ago. Recently with the tech selloff multiple companies in the sector became a little more attractive. Here I take a surface level look based on a presentation of mine.
I’ll discuss:
- Business profile
- Historical data and fundamentals
- Future expectations
- Valuation
- Summary of metrics
- Conclusion
Business profile
mCap: 15.9 Billion USD
EV: 17.6 Billion USD
Skyworks Solutions is a US based semiconductor company. They design and even manufacture semiconductors used in radio frequency and mobile communication systems. This is not a fabless company as they have vertically integrated their core production.
These systems are used in a variety of end markets, like highlighted in their latest annual report:
Historical data and fundamentals
Here are some of the, in my opinion, key financials for this company.
Overall both the top and bottom line have increased over the last years, but excluding 2021 growth has been relatively flat from 2016-2020. This growth was inorganic as a large acquisition was made in 2021 adding more than 2 and a half billion of goodwill and 2 billion of long term debt.
Future expectations
Cycles
Semiconductors are known for going through general cycles, while long term tailwinds exist in the sector it’s well know that every 5 or so years growth slows down. Semiconductors are similar to commodities in that regard. The market is expecting now to be close to one of the peaks of these smaller cycles as indicated by low valuations of stocks like Micron, Skyworks and others in the space. This is something important to keep in mind.
Analyst expectations
I took analyst expectations from Refinitiv Eikon and made my own expectations for 2025/2026 to get the following numbers:
Keep in mind that Skyworks has a fiscal year ending on Oct 1st, the years in the table are fiscal years and not calendar years
Valuation
Looking at analyst expectation and some of my own expectations (meaning we’re currently late cycle and that 2025/2026 new cycle will start with lower margins/no FCF growth) one can conclude that the stock is priced relatively cheap which results in an IRR of 16.6%. A perpetuate FCF growth of 2% annually is taken.
Keep in mind that these are expectations which incur significant risk of not materializing, be it for the better or worse.
Summary of metrics
Conclusion
Overall the company has high margins, decent growth expectations but one might have to put some doubts around that. Even taking that into account the expected annual return is significant even at lower growth levels. Management also seems to be capable of allocating cash and assets efficiently as can be illustrated by double digit returns on total capital, equity and assets.
P/E or EV/EBITDA ratio’s all indicate the company is cheap/late cycle but with a relatively decent debt to equity (-Goodwill and intangibles) ratio the company seems to be in a position to benefit significantly from the next cycle and continue generating significant cash flows in the mean time.
This surface level look is not meant as investment advice or a full on thesis as one would have to look into the debt maturities, client diversification and more sector specific research to form a better informed opinion on the stock. But I can say that from just this shallow look at the company I presented here I am genuinely interested in the business.