Why Is Skyworks (SWKS) Down 17% Since Last Earnings Report?

Core Viewpoint - Skyworks Solutions has experienced a 17% decline in share price over the past month, underperforming the S&P 500, raising questions about the continuation of this negative trend leading up to the next earnings release [1] Financial Performance - Skyworks reported Q4 fiscal 2025 non-GAAP earnings of $1.76 per share, exceeding the Zacks Consensus Estimate by 21.4% and increasing 13.5% year-over-year [2] - Revenues for the quarter reached $1.1 billion, marking a 7.3% year-over-year increase and surpassing the consensus estimate by 8.38% [2] Revenue Breakdown - Mobile revenues accounted for nearly 65% of total revenues, with a sequential increase of 21% and a year-over-year increase of 7%, driven by strong performance from the company's largest customer [3] - The largest customer represented approximately 67% of total revenues in the reported quarter [3] - Broad Markets, which includes edge IoT, automotive, industrial, infrastructure, and cloud, grew 3% sequentially and 7% year-over-year, supported by growth in edge IoT, automotive, and data center sectors [4] Operating Metrics - The non-GAAP gross margin for Q4 fiscal 2025 remained stable at 46.5% year-over-year [5] - Research & development expenses as a percentage of revenues increased by 430 basis points year-over-year to 20.3% [5] - Selling, general, and administrative expenses rose by 290 basis points to 10.2% in the reported quarter [5] - Non-GAAP operating margin contracted by 270 basis points year-over-year to 24% [5] Balance Sheet and Cash Flow - As of October 3, 2025, cash and cash equivalents along with marketable securities totaled $1.39 billion, up from $1.34 billion as of June 27 [6] - Long-term debt stood at $995.8 million, showing a slight sequential increase [6] - Cash generated from operating activities was $200 million in the quarter, down from $314.1 million in the prior quarter [6] - Free cash flow was reported at $144 million, with a free cash flow margin of 13.1% [6] Guidance - For Q1 fiscal 2026, Skyworks expects revenues between $975 million and $1.025 billion, anticipating a low- to mid-single-digit sequential decline in Mobile revenues [7] - Broad Markets are projected to grow mid- to high-single-digit year-over-year, contributing 39% of total revenues [7] - Gross margin is expected to be approximately 47%, with operating expenses estimated between $230 million and $240 million [7] - Non-GAAP earnings per share are projected to be $1.40 at the midpoint of the revenue range [8] Market Sentiment - There has been an upward trend in estimates, with the consensus estimate shifting by 6.54% recently [9] - Skyworks holds a VGM Score of A, indicating strong performance across growth, momentum, and value metrics, placing it in the top 40% for value investors [10] - Overall estimates have been trending upward, suggesting a promising outlook for the stock, which currently holds a Zacks Rank 3 (Hold) [11]