Skyworks Solutions Inc (SWKS), Apple Inc. (AAPL): This Stock Should Spring Back to Life in the Second Half

Page 1 of 2

It’s been a very turbulent year for Skyworks Solutions Inc (NASDAQ:SWKS). The maker of radio frequency (RF) chips has suffered from some bad luck as it has gained just 10% so far this year, despite posting two solid quarterly reports. The fact that it’s known more as an Apple Inc. (NASDAQ:AAPL) supplier has weighed on its performance and disturbed its momentum. Negative news regarding the iPhone 5 hasn’t gone down well with investors.

Skyworks Solutions Inc (NASDAQ:SWKS)

But, as we enter the second half of the year, which is traditionally a good time for chipmakers who thrive on mobile devices, it would be a good time to take a closer look at the company, especially considering that it is slated to release its third-quarter results on July 18.

On revenue

Analysts, according to Yahoo! Finance, expect Skyworks Solutions Inc (NASDAQ:SWKS) to post revenue of $435.4 million, which would represent an increase of 12% from last year, if achieved. The company shouldn’t have any difficulty meeting this target, as Skyworks Solutions Inc (NASDAQ:SWKS) had itself called for a similar number when it had released its second-quarter results.

The current estimate has been adjusted downward from $444 million, which was originally expected of Skyworks Solutions Inc (NASDAQ:SWKS), but the company had guided below that estimate since the third quarter is usually a slow one for many chipmakers. But despite seasonality, a year-over-year growth of 12% isn’t too bad, and Skyworks Solutions Inc (NASDAQ:SWKS) should perform better going forward, driven by certain catalysts, which I’ll come to later.

On earnings

Analysts expect Skyworks Solutions Inc (NASDAQ:SWKS) to earn $0.53 per share, which is exactly what the company had guided for on its previous conference call. The original earnings outlook was actually a penny lower, but it has been adjusted upward to reflect the company’s guidance. Skyworks has consistently beaten earnings estimates in the past four quarters and we can expect to see the same this time, as the estimate is according to the company’s own comfort.

Moreover, Skyworks stated during the last earnings call that it expected gross margin to improve by 130-180 basis points in the third quarter, and considering this, an earnings beat isn’t a far-fetched fantasy.

On outlook

It is more or less clear that Skyworks would satisfy the estimates, and as such, the outlook (as always) would be of great importance. The company had issued a mixed outlook last time, but this time I expect it to do better.

As far as revenue is concerned, Skyworks should enjoy multiple tailwinds as we move further into the second half of the year, beginning with the next iPhone. It is rumored that Apple Inc. (NASDAQ:AAPL)’s production of the next iPhone has begun, and the company might release it sometime in late September. Now, the next iPhone won’t be the only place where Skyworks should find a spot, since the company has been a regular feature in the previous iPads as well.

The production of the next iPads, especially an iPad mini with a retina display, should be another tailwind for Skyworks. While the iPhone might be maturing, the iPad mini witnessed great demand last year and a retina-toting version should find even more takers. Moreover, the prospect of a cheaper iPhone seems more likely by the day, and if it turns out to be true, both Apple Inc. (NASDAQ:AAPL) and Skyworks will have a big market to tap in emerging nations.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

6 Ways to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

The 10 Best Cities to Find Jobs in 2014

The 10 Most Controversial Songs Of All Time to Hit (and get Banned from) the Airwaves

The 20 Biggest IPOs in US History

The 10 Best Places to Visit in Mexico that Are Beautiful and Safe

7 Bad Habits that Age You Beyond Your Years

The 40 Best Fortune Cookie Sayings That Will Leave You Bemused, Befuddled, or Beguiled

10 Foods to Eat Before a Workout to Make Every Drop of Sweat Count

The 5 Best Documentaries On Netflix You Must See

The Most Heartwarming and Inspirational Story Of This Halloween Season, It Will Make You Cry and Jump For Joy

10 Best Party Songs of All Time to Bring the House Down With

5 New World Order Conspiracy Theories that Will Strangle the World

The 10 Highest Rated Movies of 2014

The 10 Largest Container Shipping Companies in the World

The 10 Largest Armies in the World: Who Should We Be Afraid Of?

Best Warren Buffett Quotes on Money You Need to Hear

The 10 Highest Suicide Rates by Profession

The 20 Most Underrated Movies of All Time

The 10 Fastest Growing Companies in America

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!