NASDAQ:SWKS appears to be flying under the radar despite its strong fundamentals.

Take a closer look at SKYWORKS SOLUTIONS INC (NASDAQ:SWKS), a remarkable value stock uncovered by our stock screener. NASDAQ:SWKS excels in fundamentals and maintains a very reasonable valuation. Let's break it down further.

How do we evaluate the Valuation for NASDAQ:SWKS?

ChartMill assigns a Valuation Rating to every stock. This score ranges from 0 to 10 and evaluates the different valuation aspects and compares the price to earnings and cash flows, while taking into account profitability and growth. NASDAQ:SWKS scores a 7 out of 10:

• SWKS's Price/Earnings ratio is rather cheap when compared to the industry. SWKS is cheaper than 93.33% of the companies in the same industry.
• SWKS's Price/Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 26.04.
• The Price/Forward Earnings ratio is 11.55, which indicates a very decent valuation of SWKS.
• Based on the Price/Forward Earnings ratio, SWKS is valued cheaper than 92.38% of the companies in the same industry.
• Compared to an average S&P500 Price/Forward Earnings ratio of 21.61, SWKS is valued a bit cheaper.
• Based on the Enterprise Value to EBITDA ratio, SWKS is valued cheaply inside the industry as 91.43% of the companies are valued more expensively.
• Compared to the rest of the industry, the Price/Free Cash Flow ratio of SWKS indicates a rather cheap valuation: SWKS is cheaper than 96.19% of the companies listed in the same industry.
• SWKS has a very decent profitability rating, which may justify a higher PE ratio.

Analyzing Profitability Metrics

ChartMill utilizes a Profitability Rating to assess stocks, scoring them on a scale of 0 to 10. This rating takes into account a variety of profitability ratios and margins, both in absolute terms and in comparison to industry peers. NASDAQ:SWKS has earned a 6 out of 10:

• With a decent Return On Assets value of 10.99%, SWKS is doing good in the industry, outperforming 73.33% of the companies in the same industry.
• SWKS has a Return On Equity of 14.53%. This is in the better half of the industry: SWKS outperforms 72.38% of its industry peers.
• Looking at the Return On Invested Capital, with a value of 12.36%, SWKS is in the better half of the industry, outperforming 75.24% of the companies in the same industry.
• The Average Return On Invested Capital over the past 3 years for SWKS is significantly above the industry average of 11.61%.
• The 3 year average ROIC (16.64%) for SWKS is well above the current ROIC(12.36%). The reason for the recent decline needs to be investigated.
• SWKS has a Profit Margin of 19.48%. This is in the better half of the industry: SWKS outperforms 74.29% of its industry peers.
• SWKS has a better Operating Margin (22.83%) than 78.10% of its industry peers.

Assessing Health Metrics for NASDAQ:SWKS

ChartMill employs its own Health Rating for stock assessment. This rating, ranging from 0 to 10, is calculated by examining various liquidity and solvency ratios. In the case of NASDAQ:SWKS, the assigned 8 reflects its health status:

• SWKS has an Altman-Z score of 7.26. This indicates that SWKS is financially healthy and has little risk of bankruptcy at the moment.
• SWKS has a Altman-Z score of 7.26. This is in the better half of the industry: SWKS outperforms 72.38% of its industry peers.
• SWKS has a debt to FCF ratio of 0.60. This is a very positive value and a sign of high solvency as it would only need 0.60 years to pay back of all of its debts.
• SWKS has a better Debt to FCF ratio (0.60) than 78.10% of its industry peers.
• A Debt/Equity ratio of 0.16 indicates that SWKS is not too dependend on debt financing.
• SWKS has a Current Ratio of 5.02. This indicates that SWKS is financially healthy and has no problem in meeting its short term obligations.
• SWKS has a better Current ratio (5.02) than 77.14% of its industry peers.
• SWKS has a Quick Ratio of 3.51. This indicates that SWKS is financially healthy and has no problem in meeting its short term obligations.
• The Quick ratio of SWKS (3.51) is better than 67.62% of its industry peers.

Understanding NASDAQ:SWKS's Growth

ChartMill employs its own Growth Rating system for all stocks. This score, ranging from 0 to 10, is derived by evaluating different growth factors, such as EPS and revenue growth, taking into account both past performance and future projections. NASDAQ:SWKS has earned a 4 for growth:

• SWKS is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 9.13% yearly.
• When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
• When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.

More Decent Value stocks can be found in our Decent Value screener.

For an up to date full fundamental analysis you can check the fundamental report of SWKS

Disclaimer

This article should in no way be interpreted as advice in any way. The article is based on the observed metrics at the time of writing, but you should always make your own analysis and trade or invest at your own responsibility.