This document provides a stock recommendation for Skyworks Solutions, Inc. (SWKS). It summarizes SWKS's business operations, financial performance, and growth opportunities in the semiconductor industry. The author values SWKS using DCF and relative multiple analyses, setting a target price of $102.36, above the current price. She recommends buying SWKS due to its strong financials, robust revenue growth, and opportunities in the growing wireless market, though notes risks from economic downturns and dependence on Apple.
4. Company Overview
• Founded in 1962
• Provide analog & mixed signal semiconductors
• Include a portfolio of a wide range of products
• Over 1,800 worldwide patents
• One of the world’s largest RF suppliers to the
smartphone industry
• Went public in 1990 as NASDAQ:SWKS
• IWF Score of 49
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8. Business Quality
• Strategic relationship with both Samsung &
Apple
• Quality of products
• Diversified portfolio
• Sustainable energy plans
8
Quality Growth Momentum Valuation
9. Management Quality
• Award winning management
• CEO: David Aldrich-12 years:
• 1,245% stock growth
• One of America’s best managed companies in 2014
• CTO: Dr. Peter L. Gammel
• 20 years experience in new product & funding development
• About 50 patents filings & more than 200 publications
9
Quality Growth Momentum Valuation
10. Industry Analysis: Porter’s Five Forces
Force Strength Analysis
Threat of New Entrants High • High capital requirement
• High economies of scale
Power of Suppliers Low • Lots of suppliers
• Low switching costs
Power of Buyers Low • Threat of backward integration
• Dominated by small large players
Availability of Substitutes Medium • Intellectual property rights
• “Copy cat”
Rivalry Medium • Pressure to develop new technology
• High exit barriers
• Few major players
10
Quality Growth Momentum Valuation
11. Industry Analysis: Demand Drivers
Gaming
20hrs-1.2GB
Music
Streaming
10hrs-1.7GB
Std. Def
Video
10hrs-2.6GB
High Def
Video
10hrs-10GB
4k Video
10hrs-30GB
11
Quality Growth Momentum Valuation
Cloud computing:
Significant & Growing
contributor to data
demand
Souce: U.S Cellulars, 4G Americas
Mean usage in North America per month
12. Industry
Analysis:
Demand Drivers
• Early stage of mobile payments
• Increasing growth for e-commerce
• Higher demand for businesses to connect with customers
through mobile
• New market opportunities: Connected Home & Automotive
Apps
12
Quality Growth Momentum Valuation
BiFET: Bipolar Field Effect Transistor, CMOS: complementary Metal Oxide Semiconductor-intergrating circuits
Leverage: Semiconductors businesses have debt-free model: fund itself through cash surpluses accumulated during booms
With gratuitous debt: no benefit for the companies in terms of new facilities or extra capabilities, but impose as a huge additional burden and a massive extra cost of doing business