Skyworks Solutions, Inc.SWKSNASDAQ

Overview Intelligence Charts News Fundamentals Key Metrics TTM Financials Earnings Growth Rating Analysts Institutional Peers Historical

DCF Valuation

DCF Valuation Summary

Strong Buy

Fair Value: $156.58 per share(market-calibrated)

+165.7%

Upside to Fair Value

Current

$58.93

Pure Model

$163.06

Fair Value

$156.58

Bull Case

$196.77

Bear Case

$131.34

Market Reality Check

Model Terminal Growth

3.75%

Market-Implied Growth

0.50%

Calibrated Growth

2.61%

Fair value uses 65% model / 35% market-implied terminal growth. Pure model: $163.06.

What's Driving This Ratingfor SWKS

↓

CapEx normalizing toward maintenance

Historical CapEx is 8.56% of revenue (heavy investment phase). Model fades this to 6.00% by Year 10, freeing up ~$146M in annual FCF. This is the biggest driver of long-term cash flow improvement.

↑

Margin expansion modeled

Current EBIT margin is 22.56% — below the sector mature average of 25.00%. Model expands margins as the business scales and operating leverage kicks in. Year 10 EBIT reaches $1.4B (24.49% margin).

→

Moderate revenue growth

Analyst consensus projects -8.05% revenue growth, fading to 3.75% by Year 10. Revenue reaches $5.7B (vs $4.1B today).

↔

Perpetuity and exit methods disagree

Perpetuity growth gives $122.70/share (17.9x terminal FCF) while exit multiple gives $203.42/share (37.4x terminal FCF). The 28x EV/EBITDA exit reflects current market multiples, while the perpetuity method with 3.75% growth is more conservative. The base case averages both methods.

🎯

Market pricing in lower growth than model

The market implies only 0.50% perpetual growth — 325bps below the model's 3.75%. This suggests the market sees headwinds or risks not in the model.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 74.95% indicates efficient cash generation. FCF reaches $1.6B by Year 10 (28.09% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)1.32

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)10.43%

Cost of Debt

Pre-tax Cost of Debt3.05%

Tax Rate9.42%

After-tax Cost of Debt2.76%

Equity Weight (E/V)88.32%

Debt Weight (D/V)11.68%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (88.32% × 10.43%) + (11.68% × 2.76%)

= 9.53%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$3.8B	$4.3B	$4.7B	$5.1B	$5.7B
EBIT	$848M	$960M	$1.1B	$1.2B	$1.4B
Tax	$80M	$90M	$104M	$115M	$131M
NOPAT	$768M	$870M	$1.0B	$1.1B	$1.3B
+ Depreciation	$488M	$553M	$614M	$661M	$738M
- Capex	$322M	$340M	$351M	$349M	$341M
- Δ NWC	-$99M	$119M	$51M	$55M	$62M
Free Cash Flow	$1.0B	$963M	$1.2B	$1.4B	$1.6B
Discount Factor	0.913	0.761	0.634	0.529	0.402
Present Value	$943M	$733M	$771M	$720M	$642M

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$1.6B

Terminal Growth Rate3.75%

WACC9.53%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$28.6B

PV of Terminal Value$11.5B

Exit Multiple Method

Year 10 EBITDA$2.1B

Exit Multiple (EV/EBITDA)28.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$59.6B

PV of Terminal Value$24.0B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$7.5B

PV of Terminal Value$11.5B

Enterprise Value$19.0B

(-) Net Debt$42M

Equity Value$18.9B

Shares Outstanding154M

Price per Share$122.70

Exit Multiple Method

PV of Projected FCFs$7.5B

PV of Terminal Value$24.0B

Enterprise Value$31.4B

(-) Net Debt$42M

Equity Value$31.4B

Shares Outstanding154M

Price per Share$203.42

Pure Model Fair Value

$163.06

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	2.75%	3.25%	3.75%	4.25%	4.75%
7.53%	$200.16	$206.72	$215.02	$225.85	$240.58
8.53%	$176.11	$180.16	$185.05	$191.09	$198.73
9.53%	$157.25	$159.92	$163.06	$166.79	$171.29
10.53%	$141.84	$143.69	$145.81	$148.28	$151.17
11.53%	$128.88	$130.21	$131.71	$133.42	$135.38

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$131.34

122.9% vs current

• -25% vs analyst consensus
• Terminal growth: 3.3%
• Beta: 1.65

Base Case

$163.06

176.7% vs current

• Analyst consensus
• Terminal growth: 3.8%
• Beta: 1.32

Bull Case

$196.77

233.9% vs current

• +25% vs analyst consensus
• Terminal growth: 4.3%
• Beta: 1.12

Key Assumptions & Drivers• Technology Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth-8.05%

Year 3 Revenue Growth10.31%

Year 5 Revenue Growth3.75%

Year 7 Revenue Growth3.75%

Year 10 Revenue Growth3.75%

Terminal Growth Rate3.75%

Margin & Efficiency

Current EBIT Margin22.56%

Terminal EBIT Margin25.00%

Tax Rate9.42%

Historical Capex / Rev8.56%

Terminal Capex / Rev6.00%

NWC / Revenue30.00%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 28x EV/EBITDA (Technology sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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