It has been about a month since the last earnings report for Skyworks Solutions (SWKS Quick QuoteSWKS - Free Report) . Shares have added about 3.8% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Skyworks due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Skyworks' Q4 Earnings and Revenues Surpass Estimates

Skyworks Solutions reported fourth-quarter fiscal 2020 non-GAAP earnings of $1.85 per share that beat the Zacks Consensus Estimate and rose from the year-ago quarter’s figure by 21.7%.

Revenues of $956.8 million surpassed the Zacks Consensus Estimate by 13.6%. Also, the top line rallied 15.6% on a year-over-year basis.

The upside can be attributed to rapid deployment of 5G, which boosted demand for Skyworks’ mobile solutions. Also, broad markets continued to witness robust momentum.

Broad markets contributed 31% to revenues in the fiscal fourth quarter.

Notable Deal Wins

In the quarter under review, Skyworks’ Sky5 product portfolio continued to facilitate several 5G launches. Skyworks' solutions were utilized by Samsung, Xiaomi, OPPO and other Tier-1 players.

Skyworks stated that 5G-enabled smartphones now constituted 12% of the total smartphones in the world. Globally, 38 countries have already launched 5G networks and more are likely to follow the suit in the coming days.

By 2023, the number of 5G-enabled smartphones, as a percentage of overall smartphones, will increase to 50%, added Skyworks.

Also, Skyworks’ clinched 5G design wins for deployment of MIMO base stations and small cell installations.

Skyworks also facilitated the touch-free point-of-sale systems at Square. Moreover, the company’s solutions also supported Facebook’s Oculus AR/VR devices.

In the fiscal third quarter, the company’s Wi-Fi 6 solutions were adopted by ASUS and NETGEAR to power their advanced routers. Logitech, Sony, and Razer chose Skyworks’ wireless audio solutions, which boast low latency to power headsets used for video gaming.

The company also rolled out 802.11ax Wi-Fi solutions for Amazon’s eero's access points. It won residential gateways design wins from Telecom Italia and Verizon. Itron and Census deployed Skyworks’ solutions to power wireless utility metering systems.

Operating Details

Non-GAAP gross margin expanded 10 basis points (bps) on a year-over-year basis to 50.4%. The figure was within the management’s guidance of 50-50.5%.

Research & development expenses, as percentage of revenues, expanded 30 bps on a year-over-year basis to 13.2%. Moreover, selling, general & administrative expenses, as percentage of revenues, contracted 20 bps from the year-ago quarter’s tally to 6.5%.

Non-GAAP operating margin expanded 100 bps on a year-over-year basis to 35% in the reported quarter.

Balance Sheet & Cash Flow

As of Oct 2, 2020, cash & cash equivalents and marketable securities were $980 million, down from $1.162 billion as of Jun 26, 2020.

Cash generated by operating activities was $267 million compared with $258.7 million in the prior quarter.

Capital expenditures came in at $146 million in the reported quarter compared with $72 million in the prior quarter.

In the fiscal fourth quarter, Skyworks repurchased 1.7 million shares for a total of $231 million and paid out $84 million as dividends.

Guidance

For first-quarter fiscal 2021, revenues are expected in the range of $1.04-$1.07 billion.

The company expects broad markets to increase at a strong double-digit rate year over year in fiscal first quarter.

Skyworks expects expect gross margin in the range of 50.25-50.75% and operating expenses of nearly $148 million. Gross margin growth is likely to benefit from favorable product mix due to more 5G products.

Non-GAAP earnings are anticipated to be $2.06 per share at the mid-point of the revenue range.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 15.37% due to these changes.

VGM Scores

Currently, Skyworks has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Skyworks has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.