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September 19, 2016

Skyworks Solutions, Inc.


NASD: SWKS - Semiconductors

Grade Earnings Quick Facts

69.4 Last Earnings Release

Last Qtr. Actual vs. Est.


07/22/2016 Dividend Yield

$1.24 / $1.21 52 Wk High


1.39%

$91.52

Next Release 11/03/2016 N/A 52 Wk Low $55.85


$76.07
09/16/2016
Year Ending 09/30/2016 $5.53 Short Interest 7% of float
Rated 'BUY' since Feb 1st, 2013, when it
Year Ending 09/30/2017 $6.15 Market Cap $14.3B
was upgraded from 'HOLD'

Overview
Company Performs Well In Fundamental Analysis
MarketGrader currently has a BUY rating on Skyworks
Solutions, Inc. (SWKS), based on a final overall grade of
69.4 scored by the company's fundamental analysis.
Skyworks Solutions, Inc. scores at the 96th percentile
among all 5888 North American equities currently
followed by MarketGrader. Our present rating dates to
February 1, 2013, when it was upgraded from a HOLD.
Relative to the Semiconductors sub-industry, which is
comprised of 71 companies, Skyworks Solutions, Inc.'s
grade of 69.4 ranks seventh. The industry grade leader
is Tower Semiconductor Ltd (TSEM) with an overall
grade of 85.0. The stock has performed poorly in the
last six months in relative terms, down 0.17% compared
with the Semiconductors sub-industry, up 18.67% and
the S&P 500 Index, up 5.07%. Please go to pages two
and three of this report for a complete breakdown of
SWKS's fundamental analysis.

Price, Rating and Sentiment History - 2 Years

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September 19, 2016

Skyworks Solutions, Inc.


NASD: SWKS - Semiconductors 69.4
While Not Entirely Negative, Growth Indicators Show Several Signs of
Growth B- Weakness
Skyworks Solutions, traditionally healthy sales growth appears to have
Market Growth LT B+
virtually ground to a halt during its most recent quarter, in which it booked
$751.70 million in total revenue. This represents a decline of 7.20%
Market Growth ST Frelative to the year earlier revenue of $810.00 million for the comparable
EPS Growth quarter. This drop contrasts to the 92.06% increase in the company's 12-
A+
month trailing revenue over a three year period. Skyworks Solutions, had
Growth Potential Fa total of $3.33 billion in 12-month trailing revenue up to--and including--
its latest quarter compared to the $1.74 billion it reported for the Revenue Qtrly. 06/30/2016 $752M
Earnings Momentum Dequivalent period ended three years ago. This reversal suggests a very Revenue Qtrly. Year Ago $810M
rapid deterioration in the company's business which, based on the Revenue 1 Yr. Chg. (7.2%)
Earnings Surprise B-
company's past performance and stable business, might also be affecting Revenue 12 Mo. Tr. Latest $3.3B
its competitors. It also reported a yearly drop in profit during the last quarter from the year earlier period, a sudden Revenue 12 Mo. Tr. 3Y Ago $1.7B
reversal from the strong profit growth the company has been posting on a long term basis. MarketGrader Revenue 12 Mo. Tr. 3Y Chg. 92.06%
measures long term profit growth by comparing the latest full year profit (12-month trailing) to the equivalent
period's results three years earlier. Skyworks Solutions,'s Second quarter net fell 10.80% to $185.00 million from
the year earlier profit of $207.40 million (excluding extraordinary items) , which contrasts with its growth in 12-
month trailing profit over a three year period. Also including last quarter's results, the company's profit grew to
$977.60 million for the 12 months ended June 30, 2016, a 282.63% jump from full year profit of $255.50 million
reported for the period ended three years earlier. The company's margins, including cash flow, operating and net
margins, grew by an average 16.44% in the latest quarter relative to the year earlier period, a significant increase;
however this is a slower growth rate compared to the two previous quarters.
The company's positive earnings surprise on July 22, 2016, 2.48% above the consensus view, failed to excite
investors as the stock fell 8.43% following the announcement, suggesting the report offered poor guidance for
future quarters. In light of this reaction to a positive earnings surprise it's important to consider how this latest
release affected the company's overall grade beyond earnings per share considering its earnings surprise record Net Income Qtrly. 06/30/2016 $185M
is still positive; over the last six quarters it has reported earnings that have been, on average, 1.84% higher than Net Income Qtrly. Year Ago $207M
the consensus estimate. Net Income 1 Yr. Chg. (10.8%)
Net Income 12 Mo. Tr. Latest $978M
Net Income 12 Mo. Tr. 3Y Ago $255M
Net Income 12 Mo. Tr. 3Y Chg. 282.63%

Company's Shares Are Attractively Priced Considering the Strength


Value A- of its Overall Fundamentals
Shares of Skyworks Solutions, are trading currently at 12.93 times 12-
Capital Structure A+
month earnings. This P/E ratio represents a 65.18% discount to the
MarketGrader-calculated "optimum" P/E ratio of 37.14, which is based on
P/E Analysis A+
the company's two-year EPS growth rate. According to this calculation,
Price/Book Ratio which looks at the company's growth across rolling 12-month periods,
A-
Skyworks Solutions,'s earnings per share have grown at an impressive
Price/Cash Flow Ratio B+
annualized rate of 35.64% in the last five years. The combination of such
a high growth rate with an apparent margin expansion probably means P/E Ratio 12 Mo. Tr. 06/30/2016 15.06
Price/Sales Ratio B-
the company has been gaining market share in recent quarters without
Optimum P/E Ratio 37.14
sacrificing financial performance, evidenced by its superior overall
Market Value A-
Profitability grade. This combination offers a strong case for future gains Forward P/E Ratio 12.93
S&P 500 Forward P/E Ratio 15.20
in the stock price. The stock also trades at 12.93 times forward earnings estimates for the next four quarters,
lower than its trailing P/E and the S&P 500 index's forward P/E of 15.20. By placing a lower multiple on the Price to (Tangible) Book Ratio 8.73
company's future earnings than it does on the market as a whole, investors may see the company as financially Price-to-Cash Flow Ratio 16.70
strong but with relatively poor growth prospects. This may offer a valuable opportunity for patient investors willing Price/Sales Ratio 4.28
to wait for future earnings reports.
Skyworks Solutions,'s current share price seems inexpensive compared to its book value, trading at a 4.15 price
to book ratio. However, when intangible assets such as goodwill, which account for a full 52.48% of the
company's total shareholders' equity, are subtracted from its total assets, the stock's price to book ratio increases
quite significantly to 8.73, a richer multiple. Its shares seem reasonably priced at 16.70 times the $4.56 in cash
flow per share generated by the company over the last twelve months, if only because its overall fundamentals
are pretty healthy. Its price to sales ratio of 4.28 is slightly higher than the Semiconductors's average of 3.39,
both based on trailing 12-month sales. Our final value indicator looks at the relationship between the company's
current market capitalization and its operating profits after deducting taxes. According to this indicator Skyworks
Solutions,'s $14.26 billion valuation is reasonable at 11.71 times its most recent quarterly net income plus
depreciation.

MarketGrader.com ©2010. MarketGrader.com Corp. All Rights Reserved. 2


September 19, 2016

Skyworks Solutions, Inc.


NASD: SWKS - Semiconductors 69.4
Profitability Record Is Excellent Across the Board Suggesting a Very
Profitability A Well Managed Operation
Skyworks Solutions, is a very profitable company with strong overall
Asset Utilization A+
indicators in this section of our analysis. The company's different
measures of return to shareholders and margins are typically above those
Capital Utilization B+
of its peers. In the last four quarters Skyworks Solutions, earned a profit
Operating Margins of $977.60 million, equivalent to 29.32% of its sales in the period. The
A
Semiconductors industry had an average operating margin of 12.96% in
Relative Margins A+
the period. The company's operating margin of 33.89% exceeded that
average by 148.67%. Skyworks Solutions,'s return on equity--an
Return on Equity A-
important measure used by MarketGrader to gauge management
efficiency--is very strong, at 27.82% based on how much the company
Quality of Revenues A+
has earned in the last year. This represents an improvement from the
year-earlier 24.46% return on equity, a very healthy sign of profitable growth.
Given such strong returns the company's capital structure seems to conservative, especially assuming it could
raise debt capital to invest into what is a steady and profitable business. Skyworks Solutions, has no debt at all.
Skyworks Solutions,'s core earnings in the last twelve months grew moderately from the twelve months ended a
year earlier. The company's EBITDA for the most recent period was $1.36 billion, or 22.90% above the $1.11
billion earned from its core operations in the prior period. EBITDA is used by MarketGrader to measure the
company's true earnings power since it includes interest expenses, income taxes, depreciation and amortization,
all non-operating expenses, which are nevertheless accounted for in other parts of our analysis that look at EPS
gains and net income.

Company's Cash Flow Indicators Are Solid Across the Board but
Cash Flow A- Offer Some Room for Improvement
Skyworks Solutions,' cash flow fell considerably during the latest quarter
Cash Flow Growth Fto $140.90 million, a 36.50% decline from the $221.90 million reported
after the same quarter last year. This marks an accelerating decline from
EBIDTA Margin A-
twelve month trailing cash flow, which fell to $873.40 million in the period
Debt/Cash Flow Ratio ended last quarter, 9.07% lower than the $960.50 million in the year
A+
earlier period, underscoring the ongoing deterioration of the company's
Interest Cov. Capacity A+
business. Even though the company's balance sheet remains debt-free,
as was the case a year ago, over that same period its cash on hand fell Cash Flow Qtrly. 06/30/2016 $141M
Economic Value A-
by 11.96%, from $1.11 billion to $973.70 million, something worth
Cash Flow Qtrly Year Ago $222M
watching when it next reports financial results.
Retention Rate A+According to our Economic Value indicator, which measures the Cash Flow 1 Yr. Chg. (36.5%)
Cash Flow 12 Mo. Tr. Latest $873M
company's return to shareholders after accounting for its costs of capital as well as its operating costs, Skyworks
Solutions,'s results were very solid last year. The company had $3.51 billion in total invested capital as of its most Cash Flow 12 Mo. Tr. 3Y Ago $393M
recently reported quarter; this includes only all forms of equity since it carries no debt. And based on its 12-month Cash Flow 12 Mo. Tr. 3Y Chg. 122.49%
trailing operating income the company generated a 32.16% return on that capital over the same period. Its after Free Cash Flow Last Qtr. $84M
tax cost of equity in the last year was 15.18%, which should be seen as the opportunity cost of investing in
Skyworks Solutions,'s shares. After deducting this cost from its return on investment the result is 16.98% in
economic value added, or EVA, the true economic profit generated by the company last year for its shareholders. Economic Value
The company hiked its quarterly common dividend in its latest quarter, reported on March 31, 2016, to 28.00 Total Invested Capital $3.5B
cents a share from 26.00 cents, a 7.69% increase. It has now been paying dividends for at least 38 years and the Return on Inv. Capital 32.16%
stock's current yield is 1.39%. Skyworks Solutions, paid out $198.10 million in common dividends during the 12 Weighted Cost of Equity 15.18%
months ended last quarter, accounting for 22.68% of cash flow and 20.26% of total earnings after taxes. This
Weighted Cost of Debt 0.00%
relatively modest payout is slightly higher than the 17.32% of total earnings is paid out in the 12 months ended a
Total Cost of Capital 15.18%
quarter earlier. Assuming it maintains its generally positive fundamentals, the company has ample flexibility to
Economic Value Added 16.98%
increase its payout by a bigger margin in the future should it wish to do so.

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September 19, 2016

Skyworks Solutions, Inc.


NASD: SWKS - Semiconductors 69.4
Profile
Skyworks Solutions, Inc. designs, develops, manufactures and markets proprietary semiconductor Key Facts:
products. It offers diverse standard and custom linear products supporting automotive, broadband, 20 Sylvan Road
cellular infrastructure, energy management, GPS, industrial, medical, military, wireless networking, Woburn ,MA 01801
smartphone and tablet applications. The company's portfolio consists of amplifiers, attenuators, Phone:
www.skyworksinc.com
circulators, demodulators, detectors, diodes, directional couplers, front-end modules, hybrids,
infrastructure RF subsystems, isolators, lighting and display solutions, mixers, modulators,
optocouplers, optoisolators, phase shifters, PLLs/synthesizers/VCOs, power dividers/combiners, Biggest Company in Sub-Industry
power management devices, receivers, switches and technical ceramics. Skyworks Solutions was Intel Corporation (INTC)
founded on June 25, 2002 and the company roots back to 1962 is headquartered in Woburn, MA. Grade 67.4
Market Cap:$178.22 billion

Smallest Company in Sub-Industry


Dynex Power Inc. (DNX.CA)
Grade 24.8
Market Cap:$5.07 million

MarketGrader Dilution Analysis Income Last Qtr 12 Mo.


Statement (06/2016) Trailing
Impact of Change in Shares on EPS - Q3 2016
Dilution Summary Revenue $752M $3.3B
*EPS Latest $0.97 Op. Income $244M $1.1B
*EPS Year Ago $1.06
Net Income $185M $978M
EPS Change 1 Yr. (9%)
*EPS $0.97 0
C. Shares - Latest(M) 192
C. Shares - Yr Ago(M) 195 *Earnings per share are based on fully diluted net income per share
excluding extrodinary items. This number may not match the
C. Shares - 1Yr Chg. (2%) headline number reported by the company.

EPS if Yr. Ago Shares $0.95


EPS Chg. if Yr. Ago (11%)
EPS Loss from Dilution $0.02
Balance Sheet Latest

Total Assets $4.0B


*Earnings per share are based on fully diluted net income per share excluding extrodinary items. This number may not match the headline number reported by the company.

Total Debt 0

Stockholders Eq. $3.5B

All numbers in millions except EPS

Ratios
Price/Earnings (12 mo. trailing) 15.06

Price/Tangible Book 8.73

Price/Cash Flow 16.70

Price/Sales 4.28

Debt/Cash Flow 0.00

Return on Equity 27.82%

Gross Margin (12 mo. trailing) 49.00%

Operating Margin (12 mo. trailing) 33.89%


Total Assets $4.0B '11 '12 '13 '14 '15 '16
Net Profit Margin (12 mo. trailing) 29.32%
Intangible Assets $1.8B Qtr 1 0.00 0.00 0.00 0.11 0.13 0.26
Long Term Debt 0 Qtr 2 0.00 0.00 0.00 0.11 0.26 0.28
Total Debt 0 Qtr 3 0.00 0.00 0.00 0.13 0.26
Book Value $3.5B Qtr 4 0.00 0.00 0.00 0.13 0.26
Enterprise Value ($974M)

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September 19, 2016

Skyworks Solutions, Inc.


NASD: SWKS - Semiconductors 69.4
Top Down Analysis
# Ticker Grade Sentiment Name Price Next EPS
1 NTIP 88.13 N Network-1 Technologies, Inc. $2.70 11/14/2016
Technology 2 UBNT 87.65 Ubiquiti Networks, Inc. $52.50 11/03/2016
P

Stocks in Sector: 806 3 SVC.CA 87.61 N Sandvine Corporation $2.93 10/06/2016


Buys: 120 (14.89%) 4 TSEM 85.05 P Tower Semiconductor Ltd $15.10 11/10/2016
Holds: 110 (13.65%)
Sells: 576 (71.46%) 5 ATHM 85.03 N Autohome, Inc. Sponsored ADR Class A $23.49 11/03/2016
6 NTES 82.44 P NetEase, Inc. Sponsored ADR $238.03 11/09/2016
No. of stocks at:
7 SILC 82.14 P Silicom Ltd. $40.27 10/24/2016
52-Wk. High: 36
52-Wk. Low: 25 8 GOOGL 81.59 P Alphabet Inc. Class A $797.97 10/20/2016
Above 50 & 200-day MA: 397 9 NII.CA 80.16 P Norsat International Inc. $8.39 11/02/2016
Below 50 & 200-day MA: 217
10 VCM.CA 79.58 N Vecima Networks Inc. $9.60 09/22/2016
37 SWKS 69.43 N Skyworks Solutions, Inc. $76.07 11/03/2016

# Ticker Grade Sentiment Name Price Next EPS


1 TSEM 85.05 P Tower Semiconductor Ltd $15.10 11/10/2016
Semiconductors
2 SIMO 78.56 P Silicon Motion Technology Corporation $50.56 07/26/2016
Stocks in Sub-Industry: 71 3 MXL 76.70 N MaxLinear, Inc. Class A $19.21 11/01/2016
Buys: 12 (16.90%)
4 SEDG 70.71 N SolarEdge Technologies, Inc. $14.59 11/03/2016
Holds: 6 (8.45%)
Sells: 53 (74.65%) 5 NVDA 70.14 P NVIDIA Corporation $62.84 11/03/2016
6 TSM 70.02 P Taiwan Semiconductor Manufacturing $28.91 10/13/2016
No. of stocks at:
52-Wk. High: 3 7 SWKS 69.43 N Skyworks Solutions, Inc. $76.07 11/03/2016
52-Wk. Low: 2 8 TXN 69.18 P Texas Instruments Incorporated $69.36 10/26/2016
Above 50 & 200-day MA: 45
9 IDTI 67.86 N Integrated Device Technology, Inc. $21.00 10/24/2016
Below 50 & 200-day MA: 10
10 INTC 67.40 P Intel Corporation $37.67 10/12/2016

1. Price Trend. A- 2. Price Momentum. B-


6.9
3. Earnings Guidance. B- 4. Short Interest. B

Copyright 2010 MarketGrader.com Corp. All rights reserved. Any unauthorized use or disclosure is prohibited. Neither the information nor any opinion expressed constitutes an offer to buy or sell any securities or any options, futures or other derivatives related to
such securities ("related investments"). The information herein was obtained from various sources; we do not guarantee its accuracy or completeness. This research report is prepared for general circulation and is circulated for general information only. It does not
have regards to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. Investors should seek financial advice regarding the appropriateness of investing in any securities or investment
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