Skyworks Solutions (NASDAQ:SWKS) Beats Q4 Sales Targets

Kayode Omotosho /
2021/11/04 4:57 pm EDT

Wireless chips maker Skyworks Solutions (NASDAQ: SWKS) beat analyst expectations in Q4 FY2021 quarter, with revenue up 37% year on year to $1.31 billion. The company expects that next quarter's revenue would be around $1.5 billion, which is the midpoint of the guidance range. That was roughly in line with analyst expectations. Skyworks Solutions made a GAAP profit of $326.3 million, improving on its profit of $246.9 million, in the same quarter last year.

Is now the time to buy Skyworks Solutions? Access our full analysis of the earnings results here, it's free.

Skyworks Solutions (SWKS) Q4 FY2021 Highlights:

  • Revenue: $1.31 billion vs analyst estimates of $1.29 billion (1% beat)
  • EPS (non-GAAP): $2.62 vs analyst estimates of $2.54 (3.18% beat)
  • Revenue guidance for Q1 2022 is $1.5 billion at the midpoint, roughly in line with what analysts were expecting
  • Free cash flow of $135.3 million, down 14.3% from previous quarter
  • Inventory Days Outstanding: 116, down from 132 previous quarter
  • Gross Margin (GAAP): 46.8%, down from 47.9% same quarter last year

“Skyworks set new records for revenue and earnings for the fourth quarter and the fiscal year, delivering significant year-over-year growth in response to robust demand across our expanded product portfolio,” said Liam K. Griffin, chairman, CEO and president of Skyworks.

Result of a merger of Alpha Industries and the wireless communications division of Conexant, Skyworks Solutions (NASDAQ: SWKS) is a designer and manufacturer of chips used in smartphones, autos, and industrial applications to amplify, filter, and process wireless signals.

Sales Growth

Skyworks Solutions's revenue growth over the last three years has been measured, averaging 13.1% annually. But as you can see below, last year has been stronger for the company, growing from quarterly revenue of $956.8 million to $1.31 billion. Semiconductors are a cyclical industry and long-term investors should be prepared for periods of high growth, followed by periods of revenue contractions (which can sometimes offer opportune times to buy).

Skyworks Solutions Total Revenue

This was a strong quarter for Skyworks Solutions as revenues grew 37%, topping analyst estimates. This marks 5 straight quarters of revenue growth, implying we are mid-cycle for Skyworks Solutions, as a typical upcycle tends to last 8-10 quarters.

Skyworks Solutions believes the growth is set to accelerate, and is guiding for revenue to grow 56.7% YoY next quarter, and Wall St analysts are estimating growth 12.3% over the next twelve months.

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Product Demand & Outstanding Inventory

Days Inventory Outstanding (DIO) are an important metric for chipmakers, as it reflects the capital intensity of the business and the cyclical nature of semiconductor supply and demand. In a tight supply environment, inventories tend to be stable, allowing chipmakers to exert pricing power. Steadily increasing DIO can be a warning sign that demand is weak, and if inventories continue to rise the company may have to downsize production.

Skyworks Solutions Inventory Days Outstanding

This quarter, Skyworks Solutions’s inventory days came in at 116, 3 days above the five year average, suggesting that despite the recent decrease the inventory levels are still slightly above the long term average.

Key Takeaways from Skyworks Solutions's Q4 Results

Sporting a market capitalization of $28.6 billion, more than $1.02 billion in cash and with positive free cash flow over the last twelve months, we're confident that Skyworks Solutions has the resources it needs to pursue a high growth business strategy.

We were very impressed by the strong improvements in Skyworks Solutions’s inventory levels. And we were also excited to see the really strong revenue growth. On the other hand, there was a deterioration in gross margin. Overall, this quarter's results seemed pretty positive and shareholders can feel optimistic. But investors might have been expecting more and the company is down 1.03% on the results and currently trades at $169.5 per share.

Should you invest in Skyworks Solutions right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

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The author has no position in any of the stocks mentioned.