Skyworks Solutions (NASDAQ:SWKS) Slides After Earnings Beat, Buy Into Recovery

Skyworks Solutions (NASDAQ:SWKS) Slides After Earnings Beat, Buy Into Recovery

You have to give Skyworks Solutions (NASDAQ:SWKS) credit; it demonstrates that you really can't keep a good stock down. Even when the company manages to beat expectations for earnings and revenue, sometimes, the share price still goes downward due to other factors or just rampant profit-taking. Regardless of what the cause was, that's just what happened at Skyworks, who beat estimates, offered improved guidance, and still saw the stock fall in pre-market trading. For those who buy the dip here, however, recovery is already in progress.

No Good Deed Goes Unpunished

The numbers at Skyworks should have triggered a buying frenzy, but that's not how the matter turned out. The company's fiscal fourth quarter featured sales of $956.8 million, which generated an adjusted earnings per share (EPS) figure of $1.85.

Solid results, but against expectations, it was even better. Analysts were expecting the company to bring in just $842.4 million, with adjusted EPS of $1.52, meaning the company beat both measures handily. Better yet, Skyworks also beat the year-over-year figures; last year at this time, the company's earnings were up 16% against the previous year's. This year, they were up 22%.

The company also offered up guidance for the present quarter, looking to bring in $1.055 billion in sales and yield adjusted EPS totals of $2.06, which means more gains to come. Given that estimates for the next quarter stand at $935.4 million generating $1.80 per share, Skyworks expects to have another expectations-beating quarter.

Some Very Happy Analysts

Our latest research on Skyworks Solutions, meanwhile, suggests that the analyst community isn't particularly unhappy about this turnout, either. Or anything else the company has done in the last few months. The company currently has 21 “buy” ratings and eight “hold” ratings for a consensus of “buy”, and that's the exact same proportion it had 30 days ago. It's one more “buy” than it had 90 days ago, but one more “hold” than it had six months ago.

The company's price target has been trending steadily upward, going from $116.36 six months ago to $148.85 today. Today alone, 11 different analysts all increased their price target on Skyworks shares, and though the amounts varied, the most recent consensus is looking seriously at gains for the company.

Look Past the Drop

If ever there were a time to suggest buying the dip, this looks like a good time to do just that. While the company did lose ground in after-hours trading—it lost about 1.5%, actually—it also staged a recovery after that loss. The recovery wasn't complete, as there was still a net loss, but the dip seemed to break even during the after-hours trading.

We know that the semiconductor market has been staging rapid consolidation, and Skyworks has benefited greatly from the growing move to 5G connectivity. In fact, some are wondering if AMD (NASDAQ:AMD) shouldn't step in and buy Skyworks outright to better consolidate its own position in the field. Given that AMD already bought Xilinx (NASDAQ:XLNX) for $35 billion recently, its ability to turn around and buy another company may be limited. Given what we've seen so far, Skyworks might well be a worthwhile target for somebody, if not AMD itself.

Buyout speculation aside, Skyworks is delivering. It's brought in better-than-expected revenue and EPS figures. Its revenue figures are growing in year-to-year comparisons, and that's a big step forward. Unsustainable, of course—no company can grow forever—but if it can keep it together, it's well on its way to being a major force in its own right.

It's got a very real part of the next generation of wireless communications technology, and given what we've seen so far on this front, that's a part to have. The growing indispensable nature of online operations makes it clear that being a part of connectivity in general is going to be the next selling shovels in a gold rush enterprise. Even though we've seen some move back to brick-and-mortar stores as pandemic restrictions relent—in some places more than others—online shoppingwas a big part of the picture before the pandemic and it's likely to be an even bigger picture now.

Skyworks Solutions may have slumped a little going into today's trading day, but a company that beats expectations this hard and this long likely won't be down for long. It's likely a good day to buy the di

Should you invest $1,000 in Skyworks Solutions right now?

Before you consider Skyworks Solutions, you'll want to hear this.

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Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Skyworks Solutions (SWKS)
4.9482 of 5 stars
Advanced Micro Devices (AMD)
4.6167 of 5 stars
$164.47+1.1%N/A241.87Moderate Buy$185.26
Xilinx (XLNX)
0.9355 of 5 stars
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