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Skyworks Solutions Inc. Stock Buy Recommendation Reiterated (SWKS)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK (TheStreet) -- Skyworks Solutions (Nasdaq:SWKS) has been reiterated by TheStreet Ratings as a buy with a ratings score of B . The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, attractive valuation levels, increase in stock price during the past year and expanding profit margins. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

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Highlights from the ratings report include:

  • SWKS's revenue growth has slightly outpaced the industry average of 3.9%. Since the same quarter one year prior, revenues slightly increased by 4.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per 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 3.31, which clearly demonstrates the ability to cover short-term cash needs.
  • After a year of stock price fluctuations, the net result is that SWKS's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • 40.30% is the gross profit margin for SKYWORKS SOLUTIONS INC which we consider to be strong. Regardless of SWKS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 14.60% trails the industry average.

Skyworks Solutions, Inc., together with its subsidiaries, offers analog and mixed signal semiconductors worldwide. The company provides power amplifiers and front-end solutions for cellular handsets from entry level to multimedia platforms, as well as smart phones. Skyworks has a market cap of $3.96 billion and is part of the technology sector and electronics industry. The company has a P/E ratio of 19.7, above the S&P 500 P/E ratio of 17.7. Shares are up 27.8% year to date as of the close of trading on Thursday.

You can view the full Skyworks Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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