Here's What The Buy Side Expects From Skyworks Solutions

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 |  About: Skyworks Solutions, Inc. (SWKS)
by: Leigh Drogen

Earnings season is underway and Skyworks Solutions (NASDAQ:SWKS) is set to report after the market closes on Thursday, January 15. Earlier this month we saw fellow semiconductor company Micron Technology (NASDAQ:MU) crush the Wall Street consensus and their stock price jumped over 11% overnight. Skyworks Solutions, which produces semiconductors for use in radio frequency and mobile communications, is up 40% in the past year and analysts are expecting them to beat the Street's expectations again this quarter.

The information below is derived from data submitted to the Estimize.com platform by a set of Buy Side and Independent analyst contributors.image

The current Wall Street consensus expectation is for SWKS to report 66c EPS and $500.04M revenue while the current Estimize.com consensus from 7 Buy Side and Independent contributing analysts is 67c EPS and $501.73M revenue.

Skyworks has beaten the Wall Street profit consensus 5 times over the past 6 quarters. In each of these 5 quarters the Estimize.com consensus from Buy-side and Independent contributing analysts has been more optimistic than Wall Street and therefore more accurate. By tapping into a wider range of contributors including hedge-fund analysts, asset managers, independent research shops, students, and non professional investors Estimize has created a data set that is up to 69.5% more accurate than Wall Street, but more importantly it does a better job of representing the market's actual expectations.

The magnitude of the difference between the Wall Street and Estimize consensus numbers often identifies opportunities to take advantage of expectations that may not have been priced into the market. In this case we are seeing an average differential between the consensuses, only about 1c EPS, which is small.image

The distribution of estimates published by analysts on Estimize range from 67c to 68c EPS and $501.00M to $502.50M in revenues. This quarter we're seeing a tighter distribution of estimates compared to previous quarters. The size of the distribution of estimates relative to previous quarters often signals whether or not the market is confident that it has priced in the expected earnings already. A smaller distribution signaling the potential for less volatility post earnings, a greater vice versa.image

Over the past 4 months the Estimize.com consensus has remained relatively unchanged. The Wall Street EPS consensus has also remained flat, but sell-side analysts have significantly increased their revenue expectations. image

The analyst with the highest estimate confidence rating this quarter is venture capitalist danvk who projects 67c EPS and $501.04M in revenue. In the Winter 2014 season, danvk is currently ranked as the 13th best analyst and is ranked 328th overall among over 3,400 contributing analysts. Estimate confidence ratings are calculated through algorithms developed by deep quantitative research which looks at correlations between analyst track records and tendencies as they relate to future accuracy. In this case the highest rated analyst is expecting SWKS to report in line with Estimize on profit, but report revenue somewhere between Estimize.com and Wall Street forecasts.image

Throughout the past 2 years SWKS has met or exceeded the Wall Street profit consensus every time. This quarter contributing analysts on the Estimize.com platform are expecting Skyworks Solutions to beat the Street by a small margin again.

Disclosure: No positions