BUY BUY BUY BUY: Skyworks Solutions Inc

September 6, 2015
NASDAQ: SWKS
SKYWORKS SOLUTIONS INC

BUY HOLD SELL
BUY
RATING SINCE 04/24/2009
A+ A A- B+ B B- C+ C C- D+ D D- E+ E E- F TARGET PRICE $112.01
Annual Dividend Rate Annual Dividend Yield Beta Market Capitalization 52-Week Range Price as of 9/3/2015
$1.04 1.21% 1.48 $16.3 Billion $44.06-$112.88 $85.34
Sector: Technology Sub-Industry: Semiconductors Source: S&P

Weekly Price: (US$) SMA (50) SMA (100) 1 Year 2 Years
SWKS BUSINESS DESCRIPTION
Skyworks Solutions, Inc., together with its 120
subsidiaries, designs, develops, manufactures, and TARGET
TARGET
TARGETPRICE
TARGET PRICE
PRICE$112.01
$112.01
$112.01 110
markets analog and mixed signal semiconductors 100
worldwide.
90
STOCK PERFORMANCE (%) 80
3 Mo. 1 Yr. 3 Yr (Ann) 70
Price Change -19.03 53.79 40.97 60
50
GROWTH (%)
Last Qtr 12 Mo. 3 Yr CAGR 40
Revenues 37.98 51.00 25.94 30
Net Income 86.17 102.72 53.75 20
EPS 82.75 100.00 52.36 Rating History
BUY
RETURN ON EQUITY (%)
Volume in Millions
SWKS Ind Avg S&P 500 60
Q3 2015 24.45 22.08 13.71 40
Q3 2014 15.36 16.53 14.43 20
Q3 2013 12.77 13.71 13.15
0
2014 2015
P/E COMPARISON COMPUSTAT for Price and Volume, TheStreet Ratings, Inc. for Rating History
RECOMMENDATION
We rate SKYWORKS SOLUTIONS INC (SWKS) a BUY. This is based on the convergence of positive investment
measures, which should help this stock outperform the majority of stocks that we rate. The company's
strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position
with reasonable debt levels by most measures, notable return on equity, expanding profit margins and good
cash flow from operations. Although no company is perfect, currently we do not see any significant
weaknesses which are likely to detract from the generally positive outlook.
22.34 23.61 19.66
SWKS Ind Avg S&P 500 HIGHLIGHTS
The revenue growth greatly exceeded the industry average of 11.5%. Since the same quarter one year prior,
revenues rose by 38.0%. Growth in the company's revenue appears to have helped boost the earnings per
EPS ANALYSIS¹ ($) share.
SWKS has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a
relatively favorable sign. Along with this, the company maintains a quick ratio of 4.66, which clearly
demonstrates the ability to cover short-term cash needs.
Q1 0.34
Q3 0.34
Q2 0.32
Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of
strength within the company. When compared to other companies in the Semiconductors & Semiconductor
Q4 0.44
Q1 0.49
Q2 0.40
Q3 0.58
Q4 0.90
Q1 1.01
Q2 0.85
Q3 1.06
Equipment industry and the overall market, SKYWORKS SOLUTIONS INC's return on equity exceeds that of
the industry average and significantly exceeds that of the S&P 500.
2013 2014 2015
NA = not available NM = not meaningful
The gross profit margin for SKYWORKS SOLUTIONS INC is rather high; currently it is at 53.70%. It has
increased from the same quarter the previous year. Along with this, the net profit margin of 25.60% is above
1 Compustat fiscal year convention is used for all fundamental
data items. that of the industry average.
Net operating cash flow has increased to $221.90 million or 11.50% when compared to the same quarter last
year. The firm also exceeded the industry average cash flow growth rate of -22.95%.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy Report Date: September 6, 2015 PAGE 1
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.
September 6, 2015
NASDAQ: SWKS

Sector: Technology Semiconductors Source: S&P
$1.04 1.21% 1.48 $16.3 Billion $44.06-$112.88 $85.34
PEER GROUP ANALYSIS INDUSTRY ANALYSIS

REVENUE GROWTH AND EBITDA MARGIN* The US semiconductors and semiconductor equipment industry is known for its technological advancements.
The semiconductor market includes companies that manufacture and sell integrated circuits and discrete
semiconductor devices. The semiconductor equipment market includes companies that manufacture and sell
100%
AVGO equipment for the production of semiconductor devices. About 5,000 companies operate in this industry,
FA
which has approximate annual revenue of $150 billion. The top 50 companies hold more than 70% of total
VOR
market share. Major players are Intel (INTC), Texas Instruments (TXN), Micron Technology (MU), and
AB
Advanced Micro Devices (AMD).

LE
SWKS The industry is cyclical and subject to supply/demand fluctuations and price erosion. After experiencing a
downturn during the recent recessionary period, the semiconductor market is building back on renewed
demand.
Revenue Growth (TTM)
ADI Demand for semiconductor products is indirect and driven by sales of personal computers, cell phones,
NXPI
consumer electronics devices, and other electronic equipment. The industry is capital-intensive and requires
UN
MU
NVDA
FA
FSL LLTC significant investments to advance technology and reduce manufacturing costs. Research and development
VO
-20%
BRCM ALTR XLNX expenses form a major part of capital expenditure and the industry spends over $15 billion annually.
R
AB
LE
15% 55% The industry is subject to various environmental regulations related to pollutant emissions, waste-water
EBITDA Margin (TTM) discharges, and the use of hazardous substances. The European Union’s directives, such as the Restriction
Companies with higher EBITDA margins and of Use of Certain Hazardous Substances and the Registration, Evaluation, Authorization, and Restriction of
revenue growth rates are outperforming companies Chemicals are relevant to the manufacturing process. China, which represents the world’s second largest
with lower EBITDA margins and revenue growth semiconductor market and is a major importer of US products, also restricts the use of hazardous substances
rates. Companies for this scatter plot have a market in electronic products.
capitalization between $9.6 Billion and $32.1 Billion.
Companies with NA or NM values do not appear. Although the industry is the second-largest exporting industry in the US, its global market share in chip
production has eroded due to insufficient research funding, workforce challenges, and foreign incentives.
*EBITDA – Earnings Before Interest, Taxes, Depreciation and
Amortization. The demand pattern has shifted production to low cost substitutes and shifted the demand centers to China,
Taiwan, and the rest of Asia. There has also been a lateral shift of capital as research and development
REVENUE GROWTH AND EARNINGS YIELD investments move away from the US to Asia.
100%
AVGO
PEER GROUP: Semiconductors & Semiconductor Equipment
FA
Recent Market Price/ Net Sales Net Income

VOR
Ticker Company Name Price ($) Cap ($M) Earnings TTM ($M) TTM ($M)
AB
LE
SWKS SKYWORKS SOLUTIONS INC 85.34 16,278 22.34 3,095.90 744.00

LLTC LINEAR TECHNOLOGY CORP 39.88 9,562 18.72 1,475.14 520.96
SWKS
AVGO AVAGO TECHNOLOGIES LTD 123.77 32,147 32.92 6,574.00 1,070.00
BRCM BROADCOM CORP 51.19 28,615 28.92 8,557.00 1,083.00
Revenue Growth (TTM)
NXPI NXP SEMICONDUCTORS NV 85.71 19,896 45.83 6,025.00 463.00

NXPI ADI MU MICRON TECHNOLOGY INC 16.59 17,974 5.53 16,819.00 3,578.00
UN
MU ADI ANALOG DEVICES 55.17 17,305 24.63 3,270.62 709.27

NVDA
FA
BRCMLLTC
FSL
VO
ALTR ALTERA CORP 48.95 14,806 38.24 1,829.13 394.33

-20%
R
AB
ALTR XLNX NVDA NVIDIA CORP 22.27 12,004 23.44 4,779.90 526.10
LE
2% 20% FSL FREESCALE SEMICONDUCTOR LTD 36.11 11,230 30.09 4,683.00 380.00
Earnings Yield (TTM) XLNX XILINX INC 41.19 10,654 17.99 2,313.72 622.32
Companies that exhibit both a high earnings yield The peer group comparison is based on Major Semiconductors companies of comparable size.
and high revenue growth are generally more
attractive than companies with low revenue growth
and low earnings yield. Companies for this scatter
plot have revenue growth rates between -4.3% and
92.4%. Companies with NA or NM values do not
appear.
September 6, 2015
NASDAQ: SWKS

$1.04 1.21% 1.48 $16.3 Billion $44.06-$112.88 $85.34
COMPANY DESCRIPTION STOCK-AT-A-GLANCE

Skyworks Solutions, Inc., together with its subsidiaries, Below is a summary of the major fundamental and technical factors we consider when determining our
designs, develops, manufactures, and markets analog overall recommendation of SWKS shares. It is provided in order to give you a deeper understanding of our
and mixed signal semiconductors worldwide. Its product rating methodology as well as to paint a more complete picture of a stock's strengths and weaknesses. It is
portfolio includes amplifiers, attenuators, battery important to note, however, that these factors only tell part of the story. To gain an even more comprehensive
chargers, circulators, DC/DC converters, demodulators, understanding of our stance on the stock, these factors must be assessed in combination with the stock’s
detectors, diodes, directional couplers, filters, front-end valuation. Please refer to our Valuation section on page 5 for further information.
modules, hybrids, infrastructure radio frequency
subsystems, isolators, LED drivers, mixers, modulators, FACTOR SCORE
optocouplers, optoisolators, phase shifters, phase locked
loops/synthesizers/VCOs, power dividers/combiners, Growth out of 5 stars 5.0
power management devices, receivers, switches, Measures the growth of both the company's income statement and weak strong
technical ceramics, and voltage regulators. The company cash flow. On this factor, SWKS has a growth score better than 90% of
also offers MIS silicon chip capacitors and transceivers. the stocks we rate.
It provides its products for supporting automotive,
broadband, wireless infrastructure, energy management,
GPS, industrial, medical, military, networking,
Total Return out of 5 stars 3.5
smartphone, and tablet applications. The company sells Measures the historical price movement of the stock. The stock weak strong
its products directly, as well as through independent performance of this company has beaten 60% of the companies we
manufacturers' representatives and distribution partners. cover.
Skyworks Solutions, Inc. was founded in 1962 and is
headquartered in Woburn, Massachusetts. Efficiency out of 5 stars 4.5
Measures the strength and historic growth of a company's return on weak strong
SKYWORKS SOLUTIONS INC invested capital. The company has generated more income per dollar of
20 Sylvan Road capital than 80% of the companies we review.
Woburn, MA 01801
USA
Phone: 781-376-3000
Price volatility out of 5 stars 4.5
http://www.skyworksinc.com Measures the volatility of the company's stock price historically. The weak strong
Employees: 6000 stock is less volatile than 80% of the stocks we monitor.
Solvency out of 5 stars 4.5

Measures the solvency of the company based on several ratios. The weak strong
company is more solvent than 80% of the companies we analyze.
Income out of 5 stars 3.0

Measures dividend yield and payouts to shareholders. The company's weak strong
dividend is higher than 50% of the companies we track.
THESTREET RATINGS RESEARCH METHODOLOGY
TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including both
price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to
perform against a general benchmark of the equities market and interest rates. While our model is
quantitative, it utilizes both subjective and objective elements. For instance, subjective elements include
expected equities market returns, future interest rates, implied industry outlook and forecasted company
earnings. Objective elements include volatility of past operating revenues, financial strength, and company
cash flows.
Our model gauges the relationship between risk and reward in several ways, including: the pricing drawdown
as compared to potential profit volatility, i.e.how much one is willing to risk in order to earn profits; the level of
acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings
growth; and the financial strength of the underlying company as compared to its stock's valuation as
compared to projected earnings growth; and the financial strength of the underlying company as compared
to its stock's performance. These and many more derived observations are then combined, ranked, weighted,
and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of
selecting stocks.
September 6, 2015
NASDAQ: SWKS

$1.04 1.21% 1.48 $16.3 Billion $44.06-$112.88 $85.34
Consensus EPS Estimates² ($) FINANCIAL ANALYSIS

IBES consensus estimates are provided by Thomson Financial SKYWORKS SOLUTIONS INC's gross profit margin for the third quarter of its fiscal year 2015 has increased
when compared to the same period a year ago. The company has grown sales and net income significantly,
outpacing the average growth rates of competitors within its industry. SKYWORKS SOLUTIONS INC is
extremely liquid. Currently, the Quick Ratio is 4.66 which clearly shows the ability to cover any short-term
cash needs. The company's liquidity has decreased from the same period last year.
At the same time, stockholders' equity ("net worth") has greatly increased by 27.33% from the same quarter
last year. Overall, the key liquidity measurements indicate that the company is very unlikely to face financial
1.51 5.26 E 6.22 E difficulties in the near future.
Q4 FY15 2015(E) 2016(E)
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the
next 12-months. To learn more visit www.TheStreetRatings.com.
INCOME STATEMENT
Q3 FY15 Q3 FY14
Net Sales ($mil) 810.00 587.00
EBITDA ($mil) 309.60 179.20
EBIT ($mil) 259.30 149.40
Net Income ($mil) 207.40 111.40
BALANCE SHEET
Q3 FY15 Q3 FY14
Cash & Equiv. ($mil) 1,106.00 893.30
Total Assets ($mil) 3,518.30 2,688.90
Total Debt ($mil) 0.00 0.00
Equity ($mil) 3,042.00 2,389.00
PROFITABILITY
Q3 FY15 Q3 FY14
Gross Profit Margin 53.70% 49.11%
EBITDA Margin 38.22% 30.52%
Operating Margin 32.01% 25.45%
Sales Turnover 0.88 0.76
Return on Assets 21.14% 13.64%
Return on Equity 24.45% 15.36%
DEBT
Q3 FY15 Q3 FY14
Current Ratio 5.70 5.91
Debt/Capital 0.00 0.00
Interest Expense 0.00 0.00
Interest Coverage NA NA
SHARE DATA
Q3 FY15 Q3 FY14
Shares outstanding (mil) 191 189
Div / share 0.13 0.11
EPS 1.06 0.58
Book value / share 15.93 12.63
Institutional Own % NA NA
Avg Daily Volume 4,444,592 4,476,455
2 Sum of quarterly figures may not match annual estimates due to
use of median consensus estimates.
September 6, 2015
NASDAQ: SWKS

$1.04 1.21% 1.48 $16.3 Billion $44.06-$112.88 $85.34
RATINGS HISTORY VALUATION

Our rating for SKYWORKS SOLUTIONS INC has not BUY. The current P/E ratio indicates a discount compared to an average of 23.61 for the Semiconductors &
changed since 4/24/2009. As of 9/3/2015, the stock Semiconductor Equipment industry and a premium compared to the S&P 500 average of 19.66. Conducting a
was trading at a price of $85.34 which is 24.4% second comparison, its price-to-book ratio of 5.36 indicates a significant premium versus the S&P 500
below its 52-week high of $112.88 and 93.7% above average of 2.62 and a premium versus the industry average of 4.34. The price-to-sales ratio is well above both
its 52-week low of $44.06. the S&P 500 average and the industry average, indicating a premium.
2 Year Chart
$150 Price/Earnings 1 2 3 4 5 Price/CashFlow 1 2 3 4 5
BUY: $25.41
premium discount premium discount

SWKS 22.34 Peers 23.61 SWKS 16.94 Peers 15.12
$100 • Average. An average P/E ratio can signify an • Premium. The P/CF ratio, a stock’s price divided by
industry neutral price for a stock and an average the company's cash flow from operations, is useful
$50 growth expectation. for comparing companies with different capital
• SWKS is trading at a valuation on par with its requirements or financing structures.
peers. • SWKS is trading at a premium to its peers.
2013 2014
Price/Projected Earnings 1 2 3 4 5 Price to Earnings/Growth 1 2 3 4 5
premium discount premium discount
SWKS 13.73 Peers 17.02 SWKS 0.18 Peers 0.82
MOST RECENT RATINGS CHANGES
• Average. An average price-to-projected earnings • Discount. The PEG ratio is the stock’s P/E divided
Date Price Action From To ratio can signify an industry neutral stock price and by the consensus estimate of long-term earnings
9/3/13 $25.41 No Change Buy Buy average future growth expectations. growth. Faster growth can justify higher price
Price reflects the closing price as of the date listed, if available • SWKS is trading at a valuation on par with its multiples.
peers. • SWKS trades at a significant discount to its peers.
RATINGS DEFINITIONS & Price/Book 1 2 3 4 5 Earnings Growth 1 2 3 4 5
DISTRIBUTION OF THESTREET RATINGS premium discount lower higher
(as of 9/3/2015) SWKS 5.36 Peers 4.34 SWKS 100.00 Peers 48.55
• Premium. A higher price-to-book ratio makes a • Higher. Elevated earnings growth rates can lead to
41.66% Buy - We believe that this stock has the stock less attractive to investors seeking stocks capital appreciation and justify higher
opportunity to appreciate and produce a total return of with lower market values per dollar of equity on the price-to-earnings ratios.
more than 10% over the next 12 months. balance sheet. • SWKS is expected to have an earnings growth rate
• SWKS is trading at a premium to its peers. that significantly exceeds its peers.
31.47% Hold - We do not believe this stock offers
conclusive evidence to warrant the purchase or sale of Price/Sales 1 2 3 4 5 Sales Growth 1 2 3 4 5
shares at this time and that its likelihood of positive total premium discount lower higher
return is roughly in balance with the risk of loss. SWKS 5.27 Peers 3.78 SWKS 51.00 Peers 13.38
• Premium. In the absence of P/E and P/B multiples, • Higher. A sales growth rate that exceeds the
26.87% Sell - We believe that this stock is likely to the price-to-sales ratio can display the value industry implies that a company is gaining market
decline by more than 10% over the next 12 months, with investors are placing on each dollar of sales. share.
the risk involved too great to compensate for any • SWKS is trading at a significant premium to its • SWKS has a sales growth rate that significantly
possible returns. industry. exceeds its peers.
DISCLAIMER:
TheStreet Ratings
14 Wall Street, 15th Floor The opinions and information contained herein have been obtained or derived from sources believed to be reliable, but
New York, NY 10005 TheStreet Ratings cannot guarantee its accuracy and completeness, and that of the opinions based thereon. Data is provided
www.thestreet.com via the COMPUSTAT® Xpressfeed product from Standard &Poor's, a division of The McGraw-Hill Companies, Inc., as well as
other third-party data providers.
Research Contact: 212-321-5381
Sales Contact: 866-321-8726 TheStreet Ratings is a division of TheStreet, Inc., which is a publisher. This research report contains opinions and is provided
for informational purposes only. You should not rely solely upon the research herein for purposes of transacting securities or
other investments, and you are encouraged to conduct your own research and due diligence, and to seek the advice of a
qualified securities professional, before you make any investment. None of the information contained in this report constitutes,
or is intended to constitute a recommendation by TheStreet Ratings of any particular security or trading strategy or a
determination by TheStreet Ratings that any security or trading strategy is suitable for any specific person. To the extent any of
the information contained herein may be deemed to be investment advice, such information is impersonal and not tailored to the
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BUY BUY BUY BUY: Skyworks Solutions Inc

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September 6, 2015

SKYWORKS SOLUTIONS INC

Sector: Technology Sub-Industry: Semiconductors Source: S&P

SKYWORKS SOLUTIONS INC

PEER GROUP ANALYSIS INDUSTRY ANALYSIS

Advanced Micro Devices (AMD).

Recent Market Price/ Net Sales Net Income

SWKS SKYWORKS SOLUTIONS INC 85.34 16,278 22.34 3,095.90 744.00

NXPI NXP SEMICONDUCTORS NV 85.71 19,896 45.83 6,025.00 463.00

MU ADI ANALOG DEVICES 55.17 17,305 24.63 3,270.62 709.27

ALTR ALTERA CORP 48.95 14,806 38.24 1,829.13 394.33

SKYWORKS SOLUTIONS INC

COMPANY DESCRIPTION STOCK-AT-A-GLANCE

Solvency out of 5 stars 4.5

Income out of 5 stars 3.0

THESTREET RATINGS RESEARCH METHODOLOGY

SKYWORKS SOLUTIONS INC

Consensus EPS Estimates² ($) FINANCIAL ANALYSIS

SKYWORKS SOLUTIONS INC

RATINGS HISTORY VALUATION

premium discount premium discount

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