SWKS
Skyworks Solutions, Inc.
$66.99
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Moderate
·
Conviction
Undervalued
Trading 25.3% below fair value
You pay
$66.99
Bear
$67.53
Fair
$89.69
Bull
$111.86
Bear
$67.53
+0.8%
$6.13 × 12x + net cash
Fair
$89.69
+33.9%
$6.13 × 16x + net cash
Bull
$111.86
+67.0%
$6.13 × 20x + net cash
Key Value Driver
Through-cycle normalized EPS ($6.13)
Implied Market Multiple
10.9x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $72.00 from 60 analysts, using a 35% weight on analyst consensus. That produces an estimated intrinsic value of $89.69 per share.
Warnings
Price-to-book value of 3.6x is above the normal range for this type of business (0.7x-2.0x). The stock may already price in a strong cycle.
Wall Street's average price target is $72.00 (from 60 analysts). Our estimate is 38% above the consensus -- consider that gap carefully.
Key Risks
- Standard 10-year DCF produces unreliable terminal values for cyclicals
- 'Cheap' P/E at cycle peak is the most common value trap — normalize first
- Captive finance subsidiaries have different risk profiles from manufacturing