Skyworks (SWKS) Q1 Earnings: What's in Store this
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Posted On: 01/16/2017 3:49:03 PM
Skyworks (SWKS) Q1 Earnings: What's in Store this Time?
[Zacks]
Zacks Equity Research
ZacksJanuary 16, 2017
Skyworks Solutions, Inc. SWKS is set to release first-quarter fiscal 2017 earnings on Jan 19. In the last quarter, the company reported a positive earnings surprise of 3.01%. We note that the company delivered positive earnings surprises in each of the last four quarters, with an average positive earnings surprise of 1.98%.
However, shares of Skyworks have underperformed the broader Zacks Semiconductors Radio Frequency industry over the last one year. While the industry gave a positive return of 35.7%, the stock gained 29.2%.
View photos
Let’s see how things are shaping up for this announcement.
Factors to Consider
Skyworks delivered mixed results in fourth-quarter fiscal 2016. Though revenues missed the Zacks Consensus Estimate, earnings beat the same comfortably. Notably, both the top and the bottom line declined on a year-over-year basis.
The company is transforming itself into a diversified analog semiconductor organization at a very rapid pace so as to enable connectivity on a global scale through the Internet of Things (IoT). In this regard, we note that during the last quarter, Skyworks launched a line of highly efficient, fully integrated modules meant for the Internet of Things (IoT) market that is growing at a rapid pace.
Recently, the company unveiled its product line up of cable TV (CATV) infrastructure solutions meant for the DOCIS 3.1 and EuroDOCSIS 3.1 cable applications. Notably, the company has clinched a key design win with a reputed Europen CATV original equipment manufacturer.
We expect the company to gain further traction in the wireless devices space and maintain its strong presence with the smartphone original equipment manufacturers (OEMs).
For first-quarter fiscal 2017, Skyworks’ management expects revenues to be up 7–9% sequentially to $902 million at the midpoint. Gross margin is expected to be in the low 51% range, while operating expenses are projected to be $112 million. Non-GAAP earnings are anticipated to be $1.58 per share.
While these developments augur well for the company, heavy investments in research and development (R&D) are escalating operating expenses and contracting margins. Significant pricing pressure, technological obsolescence and high concentration risks remain additional headwinds going into the first-quarter fiscal 2017 earnings.
Earnings Whispers?
Our proven model does not conclusively show that Skyworks is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below.
Zacks ESP: Skyworks’ Earnings ESP is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $1.48 per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Skyworks carries a Zacks Rank #3, which when combined with a 0.00% ESP makes surprise prediction difficult.
[Zacks]
Zacks Equity Research
ZacksJanuary 16, 2017
Skyworks Solutions, Inc. SWKS is set to release first-quarter fiscal 2017 earnings on Jan 19. In the last quarter, the company reported a positive earnings surprise of 3.01%. We note that the company delivered positive earnings surprises in each of the last four quarters, with an average positive earnings surprise of 1.98%.
However, shares of Skyworks have underperformed the broader Zacks Semiconductors Radio Frequency industry over the last one year. While the industry gave a positive return of 35.7%, the stock gained 29.2%.
View photos
Let’s see how things are shaping up for this announcement.
Factors to Consider
Skyworks delivered mixed results in fourth-quarter fiscal 2016. Though revenues missed the Zacks Consensus Estimate, earnings beat the same comfortably. Notably, both the top and the bottom line declined on a year-over-year basis.
The company is transforming itself into a diversified analog semiconductor organization at a very rapid pace so as to enable connectivity on a global scale through the Internet of Things (IoT). In this regard, we note that during the last quarter, Skyworks launched a line of highly efficient, fully integrated modules meant for the Internet of Things (IoT) market that is growing at a rapid pace.
Recently, the company unveiled its product line up of cable TV (CATV) infrastructure solutions meant for the DOCIS 3.1 and EuroDOCSIS 3.1 cable applications. Notably, the company has clinched a key design win with a reputed Europen CATV original equipment manufacturer.
We expect the company to gain further traction in the wireless devices space and maintain its strong presence with the smartphone original equipment manufacturers (OEMs).
For first-quarter fiscal 2017, Skyworks’ management expects revenues to be up 7–9% sequentially to $902 million at the midpoint. Gross margin is expected to be in the low 51% range, while operating expenses are projected to be $112 million. Non-GAAP earnings are anticipated to be $1.58 per share.
While these developments augur well for the company, heavy investments in research and development (R&D) are escalating operating expenses and contracting margins. Significant pricing pressure, technological obsolescence and high concentration risks remain additional headwinds going into the first-quarter fiscal 2017 earnings.
Earnings Whispers?
Our proven model does not conclusively show that Skyworks is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below.
Zacks ESP: Skyworks’ Earnings ESP is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $1.48 per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Skyworks carries a Zacks Rank #3, which when combined with a 0.00% ESP makes surprise prediction difficult.
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