(SWKS - Analyst Report
) has finally slipped to a Zacks #5 Rank (Strong Sell) after earnings estimates for next year dropped 11.8% in the past two months since the company's April 28 report.
The Zacks consensus for fiscal year 2017 (ending Sep 2017) was knocked down from $6.53 to $5.76 when three analysts lowered their profit projections. This is still 13% EPS growth, but it's part of a trend for the company's outlook that puts even the most recent estimates in jeopardy.
Below is the proprietary Zacks Price & Consensus chart to show that trend of falling earnings projections for the past year.
It's not a pretty picture of earnings momentum.
So what's eating the key supplier of RF (radio frequency) chips to the global Internet of Things?
In a word, the iPhone.
Since Skyworks depends on as much as 30% of its sales to Apple (AAPL - Analyst Report) , the slide in iPhone unit growth has taken Skyworks earnings with it.
And even though the launch of the new iPhone 7 later this year is expected to boost Apple sales respectably, the jury is still out for suppliers as caution about future projections becomes the operative word.
Until the estimates picture turns around for Skyworks, it may be best to stay on the sidelines for a quarter or two. The Zacks Rank will let you know when it's safe.
Kevin Cook is a Senior Stock Strategist for Zacks where he runs the Follow The Money