I started looking into SWKS over the weekend I first looked at the last 2 years of earnings reports:
Revenue in $M
Q1 Q2 Q3 Q4 Total
2012 393.7 364.7 389 421 1568.4
2013 454 425.2 436.1 477 1792.3
2014 505 481 587 680 2253
2015
Adj EPS
Q1 Q2 Q3 Q4 Total
2012 0.34 0.32 0.45 0.53 1.64
2013 0.55 0.48 0.54 0.64 2.21
2014 0.67 0.62 0.83 1 3.12
2015
Q4 2014 is the current quarter so those numbers are from the company’s issued guidance.
Now here are the numbers in columns with some calculations added:
Adj EPS Revenue YoY EPS growth (Q) YoY Rev growth (Q) TTM Adj EPS TTM EPS seq growth
Q1 2012 12/31/2011 0.34 393.7
Q2 2012 3/31/2012 0.32 364.7
Q3 2012 6/30/2012 0.45 389
Q4 2012 9/30/2012 0.53 421 1.64
Q1 2013 12/31/2012 0.55 454 61.8% 15.3% 1.85 12.8%
Q2 2013 3/31/2013 0.48 425.2 50.0% 16.6% 2.01 8.6%
Q3 2013 6/30/2013 0.54 436.1 20.0% 12.1% 2.1 4.5%
Q4 2013 9/30/2013 0.64 477 20.8% 13.3% 2.21 5.2%
Q1 2014 12/31/2013 0.67 505 21.8% 11.2% 2.33 5.4%
Q2 2014 3/31/2014 0.62 481 29.2% 13.1% 2.47 6.0%
Q3 2014 6/30/2014 0.83 587 53.7% 34.6% 2.76 11.7%
Q4 2014 9/30/2014 1 680 56.3% 42.6% 3.12 13.0%
Q1 2015 12/31/2014 1.07 710 59.7% 40.6% 3.52 12.8%
Q2 2015 3/31/2015 1 693 61.3% 44.1% 3.9 10.8%
The first and second columns with percentages are YoY EPS growth and YoY revenue growth, respectively. Q4 2014 is based on the company’s guidance and Q1 and Q2 2015 are my guesses based on their past 2 years of seasonality and recent growth. SWKS has exceeded their own guidance for at least the past 8 quarters. Growth in EPS and revenue really accelerated in Q3 2014 jumping by more than 20 percentage points!! Based on their guidance for Q4 this will continue for the current quarter. Next column is the the TTM EPS. The last column is the sequential TTM EPS growth.
The P/E is currently at about 20. If the company hits their guidance, the forward P/E is 17.67 after the next earnings date. If the company achieves the EPS in my table above for Q1 and Q2 2015 then those forward P/Es are 15.66 and 14.13.
My biggest concern with this company is that it is in the semiconductor industry which is cyclical. At some point, there will be a downturn. I own AFOP which is also in a cyclical industry. AFOP’s growth has stalled while SWKS’s growth has accelerated. Also, AFOP has a much more concentrated customer base with one 35% customer. SWKS’s customer base is more diversified with only Samsumg being a >10% customer. Based on these reasons, I sold some AFOP today to buy some SWKS. Regarding a possible downturn in the semiconductor industry, my guess is that it will not happen this year or in the first of 2015; it seems to be that economic growth is accelerating and businesses are more optimistic about expanding. Thus, I think that SWKS could hit the numbers in my table above for the next 3 unreported quarters. If the P/E stays at 20 then the stock price would go to about $80 by next April.
Chris
Chris