Apple Supplier Skyworks Solutions Delivers Strong Results

| About: Skyworks Solutions, (SWKS)

Apple (NASDAQ:AAPL) supplier Skyworks Solutions (NASDAQ:SWKS) posted results after the bell on Wednesday. It delivered a report that showed that concern (and a quick decline in SWKS stock price) around competitor's TriQuint Semiconductor's (TQNT) disappointing earnings report last week were unwarranted.

I provided a positive profile on this maker of analog and mixed signal semiconductors in September after it was revealed that it gained some component share in the newly released versions of Apple's iPhone. This earnings report confirms that the company's prospects are on an upward trajectory and the stock is attractive at these levels.

Positives From Earnings Report:

  • Revenue was up more than 13% Y/Y and slightly beat consensus expectations.
  • Skyworks posted quarterly EPS of 64 cents a share, two pennies above the expected level.
  • The company raised next quarter's forward guidance to revenue of $500M and EPS of $0.66, above a consensus of $494.6M and $0.65.
  • Management also stated it is seeing strong demand for its analog chips.

6 additional reasons SWKS can go higher from $25 a share:

  1. Apple's iPhone continues to sell at higher than expected levels and Apple upped its guidance after its earnings report expecting robust holiday sales. Skyworks also supplies Google (NASDAQ:GOOG) and HTC.
  2. This was the seventh straight quarter the company slightly beat bottom line consensus. In addition, consensus earnings estimates for FY2014 have risen substantially in the last month, and I would expect at least a few upward revisions by analysts after the company increased guidance.
  3. Revenue growth should continue to post 7% to 10% gains in FY2014 and the stock has a five year expected PEG of under 1 (.74).
  4. Despite this growth, the stock sells for just 9x forward earnings, a discount to its five year average (12.7).
  5. The company has a robust balance sheet with over $400M of next cash on the books.
  6. The median price target of the 16 analysts that cover the stock is $30.50 a share, ~$5 a share above SWKS' current price.

Disclosure: I am long AAPL, SWKS. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.