As you might know, Skyworks Solutions, Inc. (NASDAQ:SWKS) recently reported its yearly numbers. It was a credible result overall, with revenues of US$3.4b and earnings per share of US$4.89 both in line with analyst estimates, showing that Skyworks Solutions is executing in line with expectations. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest forecasts to see what analysts are expecting for next year.
Following last week's earnings report, Skyworks Solutions's 23 analysts are forecasting 2020 revenues to be US$3.43b, approximately in line with the last 12 months. Earnings per share are expected to step up 10% to US$5.41. In the lead-up to this report, analysts had been modelling revenues of US$3.38b and earnings per share (EPS) of US$5.08 in 2020. So the consensus seems to have become somewhat more optimistic on Skyworks Solutions's earnings potential following these results.
The consensus price target rose 19% to US$104, suggesting that higher earnings estimates flow through to the stock's valuation as well. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Skyworks Solutions at US$125 per share, while the most bearish prices it at US$63.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Zooming out to look at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up both against past performance, and against industry growth estimates. It's pretty clear that analysts expect Skyworks Solutions's revenue growth will slow down substantially, with revenues next year expected to grow 1.5%, compared to a historical growth rate of 6.3% over the past five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 7.1% per year. Factoring in the forecast slowdown in growth, it seems obvious that analysts still expect Skyworks Solutions to grow slower than the wider market.
The Bottom Line
The most important thing to take away from this is that analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Skyworks Solutions following these results. On the plus side, there were no major changes to revenue estimates; although analyst forecasts imply revenues will perform worse than the wider market. There was also a nice increase in the price target, with analysts feeling that the intrinsic value of the business is improving.
With that in mind, we wouldn't be too quick to come to a conclusion on Skyworks Solutions. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Skyworks Solutions going out to 2022, and you can see them free on our platform here..
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
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