Catalysts
Essential to 5G and IoT
$25 in revenues per 5G chip vs $18 per 4G chip
Diversifying away from mobile technology into EV and others
Financial Analysis
Record quarterly revenues of $1.51 billion up 58% sequentially and 69% YoY
EPS of $3.05 up 103% YoY
FCF of $367 million up 27% YoY
Share repurchase program of $2.0 billion expiring in January 2023
Still good balance sheet with $617 million in cash and cash equivalents and no long-term debts
Valuation
Assumptions
Use data from Qualcomm, American Tower, and Skyworks Solutions to estimate the growth of 5G technology
Qualcomm estimates 2.8 billion 5G connections by 2025
Annual growth of smartphone sales at 3%
Skyworks Solutions will have half of market share according to analysts
Take a margin of safety giving them only 20% of market share
FCF margin of 28%
Discount Rate of 9%
Terminal Growth Rate of 3%
Ignore non-mobile business (another margin of safety)
Exit Multiples analysis
based on 2025 FCF with current P/FCF of 34 ranging from 12 to 36 in the last 5 years
20% higher/lower FCF in bull/bear cases
Number of shares outstanding 10% lower at 147 million
Conclusion
Annual expected returns of 13% with mostly focused on mobile business with huge margin of safety
Hold for the moment with record price but definite buy at any correction
Read the full analysis on my research partnership: https://ishfaaqpeerally.teachable.com/courses/662813/lectures/30179215
