Skyworks (SWKS) Up 7.5% Since Last Earnings Report: Can It Continue?

Core Viewpoint - Skyworks Solutions reported mixed financial results for Q4 fiscal 2024, with earnings beating estimates but revenues declining year-over-year, raising questions about future performance leading up to the next earnings release [2][3][14]. Financial Performance - Non-GAAP earnings per share for Q4 fiscal 2024 were $1.55, exceeding the Zacks Consensus Estimate by 1.97$1.02 billion, a decrease of 15.9% year-over-year, yet slightly above the consensus mark by 0.31% [3]. - Mobile revenues accounted for nearly 65% of total revenues, showing a sequential increase of 21% due to normalization of customer orders and inventory levels [3]. Market and Product Developments - Skyworks gained design wins in 5G for premium Android smartphones and expanded its Wi-Fi 7 pipeline with major partners, indicating strong product momentum [4]. - Broad markets contributed approximately 35% to total revenues, with signs of stabilization in demand for edge IoT and automotive electrification [5]. Operating Metrics - Non-GAAP gross margin contracted by 70 basis points year-over-year to 46.5% [6]. - Research and development expenses increased by 390 basis points year-over-year to 16% of revenues [7]. - Selling, general and administrative expenses rose by 120 basis points to 7.2% [8]. - Non-GAAP operating margin decreased by 600 basis points year-over-year to 26.7% [9]. Balance Sheet and Cash Flow - As of September 27, 2024, cash and cash equivalents were $1.57 billion, up from$1.28 billion as of June 28, 2024 [10]. - Long-term debt remained stable at $994.3 million [11]. - Cash generated by operating activities was$476 million, compared to $273.5 million in the prior quarter [11]. - Free cash flow was reported at$393.2 million, with a free cash flow margin of 38.4% [12]. - The company paid dividends totaling $112 million in the reported quarter [13]. Guidance and Market Sentiment - For Q1 fiscal 2025, Skyworks expects revenues between$1.05 billion and $1.08 billion, indicating a sequential increase at the mid-point [14]. - The consensus estimate for earnings per share has shifted downward by 7.19% in the past month [15][16]. - Skyworks currently holds a Zacks Rank 4 (Sell), reflecting a negative outlook based on estimate revisions [18]. Industry Context - Skyworks is part of the Zacks Semiconductors - Radio Frequency industry, which has seen mixed performance; for instance, Qorvo reported a year-over-year revenue decline of 5.2% [19].