DCF Studio

    SWKS · NMS · Technology

    Skyworks Solutions, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 48.22

    Market price

    USD 88.76

    Implied upside

    -45.7%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    Value Per Share

    Perpetuity growth
    USD 48.22-45.7%
    Exit multiple
    USD 71.16-19.8%
    Market price
    USD 88.76

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn1bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 3.7bnUSD 3.4bnUSD 3.0bnUSD 2.8bnUSD 2.5bn-9.3%
    EBITUSD 780.2mUSD 707.3mUSD 641.2mUSD 581.3mUSD 527.0m-9.3%
    NOPATUSD 708.8mUSD 642.5mUSD 582.5mUSD 528.1mUSD 478.7m-9.3%
    Add depreciation & amortisationUSD 440.6mUSD 399.4mUSD 362.1mUSD 328.3mUSD 297.6m-9.3%
    Less capital expenditureUSD -223.5mUSD -202.6mUSD -183.6mUSD -166.5mUSD -150.9m-9.3%
    Less increase in working capitalUSD 362.3mUSD 328.5mUSD 297.8mUSD 269.9mUSD 244.7m+9.3%
    Free cashflow to firmUSD 1.3bnUSD 1.2bnUSD 1.1bnUSD 959.8mUSD 870.1m-9.3%
    Discount factor0.94590.84640.75740.67770.6064-
    Present valueUSD 1.2bnUSD 988.5mUSD 801.9mUSD 650.5mUSD 527.6m-18.9%
    Present Value Of The ForecastUSD 4.2bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta1.347Reported 1.518, pulled toward 1.0 (Blume)
    Cost of equity12.41%Risk-free + beta x equity risk premium
    Cost of debt5.00%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 13.4bn91.7% of capital
    Total debtUSD 1.2bn8.3% of capital, book value as a proxy
    Tax rate9.2%Effective, capped at statutory
    WACC11.76%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 48.22

    43% of EV

    Forecast FCFF, final year
    USD 870.1m
    Capex at depreciation, working capital in reinvestment
    USD 587.2m
    Less reinvestment at g/ROIC (20.9% of NOPAT)
    USD -122.5m
    Capitalised
    USD 464.7m
    ROIC (reported)
    12.0%
    Terminal value, undiscounted
    USD 5.1bn
    Terminal value, discounted
    USD 3.1bn
    Enterprise value
    USD 7.3bn
    Less net debt
    USD -171.1m
    Equity value
    USD 7.5bn

    Exit at 13.4x EBITDA

    Value per shareUSD 71.16

    61% of EV

    Terminal value, undiscounted
    USD 11.0bn
    Terminal value, discounted
    USD 6.7bn
    Enterprise value
    USD 10.9bn
    Less net debt
    USD -171.1m
    Equity value
    USD 11.0bn

    Spread between methods: 38%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    9.76%55.9356.4356.9857.6058.31
    10.76%51.5551.8152.1052.4152.75
    11.76%47.9848.1048.2248.3448.47
    12.76%45.1545.2445.3345.4145.50
    13.76%42.7742.8442.9243.0043.07

    Outlined: this model. Green text: above today's price of 88.76. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year-9.3%16.0%+25.4pp
    EBIT margin21.1%48.4%+27.3pp
    Discount rate11.8%6.5%-5.3pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.