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Skyworks' (SWKS) Q2 Earnings Top Estimates, Revenues Up Y/Y

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Skyworks Solutions (SWKS - Free Report) reported second-quarter fiscal 2022 non-GAAP earnings of $2.63 per share that beat the Zacks Consensus Estimate by 0.38% and improved 11% year over year.

Revenues of $1.34 billion surpassed the Zacks Consensus Estimate by 0.48%. The top line increased 14% on a year-over-year basis. Revenues were driven by the growth of Tier 1 mobile and a diversified customer base.

The company’s quarterly results benefited from an increased rate of 5G deployment. However, business in the mobile segment was negatively impacted by the global supply chain issues and continued COVID restrictions.

Broad markets revenues of $523 million (39% of total revenues) surged 36% year over year and 10% sequentially, driven by strong demand for 5G, IoT, automotive and wireless infrastructure.

The acquisition of the Infrastructure and Automotive business of Silicon Labs helped in expanding the customer base during the reported quarter.

The adoption of Skyworks’ Sky5 yielded strong results as the platform supports OEMs, including Google and Samsung.

Skyworks Solutions, Inc. Price, Consensus and EPS Surprise

Skyworks Solutions, Inc. Price, Consensus and EPS Surprise

Skyworks Solutions, Inc. price-consensus-eps-surprise-chart | Skyworks Solutions, Inc. Quote

Operating Details

Gross profit of $683 million resulted in non-GAAP gross margin expanding by 40 basis points (bps) on a year-over-year basis to 51.2%.

Research & development expenses, as a percentage of revenues, increased 90 bps year over year to 12%.

Selling, general and administrative expenses increased 20 bps to 6.2% in the reported quarter.

Non-GAAP operating margin contracted 80 bps on a year-over-year basis to 36.8% in the reported quarter.

Balance Sheet & Cash Flow

As of Apr 1, 2022, cash & cash equivalents and marketable securities were $778 million compared with $1.02 billion as of Dec 31, 2021.

Long-term debt was $2.19 billion as of Apr 1, 2021, flat with the prior quarter.

Cash generated by operating activities was $393 million in the quarter under discussion compared with $616 million in the previous quarter.

Skyworks repurchased 3 million shares for $418 million in the reported quarter.

Skyworks’ announced a quarterly dividend of 56 cents per share payable on Jun 14, 2022, to shareholders as of May 24.

Guidance

For the third quarter of fiscal 2022, Skyworks expects revenues between $1.20 billion and $1.260 billion, indicating growth of 10% from the year-ago quarter.

Growth in broad markets is expected to be stronger in mobile markets. Nevertheless, Skyworks expects both segments to witness double-digit growth year over year in the third quarter of fiscal 2022.

Earnings are expected to be $2.32 per share at the mid-point of this revenue guidance, indicating growth of 10% from the year-ago quarter.

Skyworks expects gross margin between 50.75% and 51.25%. The company expects operating expenses between $190 million and $192 million.

Zacks Rank & Stocks to Consider

Skyworks currently carries a Zacks Rank #4 (Sell).

SWKS’s shares have tumbled 23% compared with the Zacks Computer and Technology sector’s decline of 21.7% in the year-to-date period.

Here are some better-ranked stocks worth considering in the broader sector.

Analog Devices (ADI - Free Report) carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

ADI shares have fallen 11% in the year-to-date period. ADI is anticipated to report second-quarter 2022 earnings on May 18.

Cisco Systems (CSCO - Free Report) carries a Zacks Rank of 2.

Cisco shares have declined 21.7% in the year-to-date period. CSCO is expected to report third-quarter 2022 earnings on May 18.

BWX Technologies (BWXT - Free Report) carries a Zacks Rank of 2.

BWX shares have appreciated 6.3% in the year-to-date period. BWX is anticipated to report first-quarter 2022 earnings on May 9.