In a market where value is scarce, NASDAQ:SWKS offers a refreshing opportunity with its solid fundamentals.

Last update: Apr 24, 2024

Uncover the potential of SKYWORKS SOLUTIONS INC (NASDAQ:SWKS) as our stock screener's choice for an undervalued stock. NASDAQ:SWKS maintains a strong financial position and offers an appealing valuation. We'll delve into the specifics below.

Valuation Assessment of 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:

Based on the Price/Earnings ratio, SWKS is valued cheaply inside the industry as 90.57% of the companies are valued more expensively.
The average S&P500 Price/Earnings ratio is at 25.20. SWKS is valued rather cheaply when compared to this.
Based on the Price/Forward Earnings ratio of 11.91, the valuation of SWKS can be described as reasonable.
94.34% of the companies in the same industry are more expensive than SWKS, based on the Price/Forward Earnings ratio.
SWKS is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 21.60, which is the current average of the S&P500 Index.
87.74% of the companies in the same industry are more expensive than SWKS, based on the Enterprise Value to EBITDA ratio.
96.23% of the companies in the same industry are more expensive than SWKS, based on the Price/Free Cash Flow ratio.
SWKS has a very decent profitability rating, which may justify a higher PE ratio.

Looking at the Profitability

ChartMill assigns a proprietary Profitability Rating to each stock. The score is computed by evaluating various profitability ratios and margins and ranges from 0 to 10. NASDAQ:SWKS was assigned a score of 6 for profitability:

The Return On Assets of SWKS (10.99%) is better than 76.42% of its industry peers.
SWKS's Return On Equity of 14.53% is fine compared to the rest of the industry. SWKS outperforms 73.58% of its industry peers.
SWKS has a better Return On Invested Capital (12.36%) than 78.30% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for SWKS is significantly above the industry average of 11.07%.
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's Profit Margin of 19.48% is fine compared to the rest of the industry. SWKS outperforms 74.53% of its industry peers.
SWKS has a Operating Margin of 22.83%. This is in the better half of the industry: SWKS outperforms 77.36% of its industry peers.

Assessing Health Metrics for NASDAQ:SWKS

ChartMill utilizes a Health Rating to assess stocks, scoring them on a scale of 0 to 10. This rating takes into account a variety of liquidity and solvency ratios, both in absolute terms and in comparison to industry peers. NASDAQ:SWKS has earned a 8 out of 10:

An Altman-Z score of 7.14 indicates that SWKS is not in any danger for bankruptcy at the moment.
With a decent Altman-Z score value of 7.14, SWKS is doing good in the industry, outperforming 70.75% of the companies in the same industry.
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.
With a decent Debt to FCF ratio value of 0.60, SWKS is doing good in the industry, outperforming 78.30% of the companies in the same industry.
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 Current ratio of 5.02. This is in the better half of the industry: SWKS outperforms 77.36% of its industry peers.
A Quick Ratio of 3.51 indicates that SWKS has no problem at all paying its short term obligations.
SWKS has a better Quick ratio (3.51) than 67.92% of its industry peers.

How do we evaluate the Growth for NASDAQ:SWKS?

ChartMill assigns a proprietary Growth Rating to each stock. The score is computed by evaluating various growth aspects, like EPS and revenue growth. We take into account the history as well as the estimated future numbers. NASDAQ:SWKS was assigned a score of 4 for growth:

Based on estimates for the next years, SWKS will show a quite strong growth in Earnings Per Share. The EPS will grow by 9.13% on average per year.
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.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.

Our Decent Value screener lists more Decent Value stocks and is updated daily.

Our latest full fundamental report of SWKS contains the most current fundamental analsysis.

Disclaimer

Important Note: The content of this article is not intended as trading advice. It is essential to perform your own analysis and exercise caution when making trading decisions. The article presents observations created by automated analysis but does not guarantee any trading or investment outcomes. Always trade responsibly and make independent judgments.