Stock pitched for the Haley Large-Cap Fund, MSF Student Managed Fund at Villanova University

1. STOCK RECOMMENDATION FOR HAYLEY LARGE CAP FUND
PREPARED BY THAO PHUONG LE, VILLANOVA MSF’16

2. SKYWORKS SOLUTIONS, INC.
Company Overview
Stock Analysis
Target Price
Summary
2

3. BUSINESS DESCRIPTION
3

4. Company Overview
• Founded in 1962
• Provide analog & mixed signal semiconductors
• Include a portfolio of a wide range of products
• Over 1,800 worldwide patents
• One of the world’s largest RF suppliers to the
smartphone industry
• Went public in 1990 as NASDAQ:SWKS
• IWF Score of 49
4
0
20
40
60
80
100
120
10/22/10 10/22/11 10/22/12 10/22/13 10/22/14
Price
Year
Historical Price of SWKS
Price

5. Customers
5
Foxconn
34%
Samsung
10%
Other
56%
Revenue by Customers in 2014
Foxconn Samsung Other
• Key customers: Foxconn, Samsung, Cisco,
Dell, Fujitsu, GE, Google, HTC, Huawei, Lenovo,
LG, Microsoft, etc.
• Through Foxconn: main RF supplier for Apple

6. Apple &
Skyworks
0
20
40
60
80
100
120
140
10/15/10 10/15/11 10/15/12 10/15/13 10/15/14 10/15/15
5y Price Comparison between AAPL & SWKS
Skyworks Apple
6

7. Stock Analysis
Quality
Growth
Momentum
Valuation
7

8. Business Quality
• Strategic relationship with both Samsung &
Apple
• Quality of products
• Diversified portfolio
• Sustainable energy plans
8
Quality Growth Momentum Valuation

9. Management Quality
• Award winning management
• CEO: David Aldrich-12 years:
• 1,245% stock growth
• One of America’s best managed companies in 2014
• CTO: Dr. Peter L. Gammel
• 20 years experience in new product & funding development
• About 50 patents filings & more than 200 publications
9
Quality Growth Momentum Valuation

10. Industry Analysis: Porter’s Five Forces
Force Strength Analysis
Threat of New Entrants High • High capital requirement
• High economies of scale
Power of Suppliers Low • Lots of suppliers
• Low switching costs
Power of Buyers Low • Threat of backward integration
• Dominated by small large players
Availability of Substitutes Medium • Intellectual property rights
• “Copy cat”
Rivalry Medium • Pressure to develop new technology
• High exit barriers
• Few major players
10
Quality Growth Momentum Valuation

11. Industry Analysis: Demand Drivers
Gaming
20hrs-1.2GB
Music
Streaming
10hrs-1.7GB
Std. Def
Video
10hrs-2.6GB
High Def
Video
10hrs-10GB
4k Video
10hrs-30GB
11
Quality Growth Momentum Valuation
Cloud computing:
Significant & Growing
contributor to data
demand
Souce: U.S Cellulars, 4G Americas
Mean usage in North America per month

12. Industry
Analysis:
Demand Drivers
• Early stage of mobile payments
• Increasing growth for e-commerce
• Higher demand for businesses to connect with customers
through mobile
• New market opportunities: Connected Home & Automotive
Apps
12
Quality Growth Momentum Valuation

13. Financial Quality: Profitability
13
Quality Growth Momentum Valuation
-7.74
17.19
-11.59
19.76
2005 2006 2007 2008 2009 2010 2011 2012 201 2014
SWKS’s ROA & ROE from 2005-2014
Return on Assets Return on Equity
38.54
41.14
43.50
36.00
37.00
38.00
39.00
40.00
41.00
42.00
43.00
44.00
2005 2006 2007 2008 2009 2010 2011 2012 201 2014
Gross Margin

14. Financial Quality: Profitability <cont’>
14
24.21%
20.03%
5.93%
34.71%
0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
0.4
Skyworks Analog Devices Avago Technologies Linear Technology
Corp.
Comparable ROIC in FY2014
120.93%
84.06%
45.10%
98.64%
0
0.2
0.4
0.6
0.8
1
1.2
1.4
Skyworks Analog Devices Avago Technologies Linear Technology
Corp.
Comparable Sales/IC in FY2014
Quality Growth Momentum Valuation

15. Historical Growth
0.75
1.2 1.12
1.47
2.4
0
0.5
1
1.5
2
2.5
3
Sep'10 Sep'11 Sep'12 Sep'13 Sep'14
EPS
EPS Expon. (EPS)
15
Quality Growth Momentum Valuation
33.55%
10.55%
27.87%
20.92%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
2010 2011 2012 2013 2014
Sales Growth for the past 5 years
Sales Growth Average

16. Future Growth
1.07
1.42
1.57
1.79
2.29
2.93
3.75
4.68
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
2010 2011 2012 2013 2014 2015 2016 2017
Forecasted Sales
• 26.9% average sales growth for the next
3 years
• Consistent with management’s
expectation & Bloomberg & FactSet
forecasts
16
Quality Growth Momentum Valuation

17. Price Momentum: Relative to IT Industry
0
500
1000
1500
2000
2500
10/31/05 10/31/06 10/31/07 10/31/08 10/31/09 10/31/10 10/31/11 10/31/12 10/31/13 10/31/14
(INDEX) Skyworks (INDEX) SP5IT
17
Quality Growth Momentum Valuation

18. Price Mometum: Relative to Competitors
18
Quality Growth Momentum Valuation
0
50
100
150
200
250
300
350
400
450
500
SWKS ADI AVGO

19. Earnings Momentum
19
Quality Growth Momentum Valuation
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
Q4
'10
Q1
'11
Q2
'11
Q3
'11
Q4
'11
Q1
'12
Q2
'12
Q3
'12
Q4
'12
Q1
'13
Q2
'13
Q3
'13
Q4
'13
Q1
'14
Q2
'14
Q3
'14
Q4
'14
Q1
'15
Q2
'15
Q3
'15
Actual Mean

20. Valuation: DCF Model
20
Quality Growth Momentum Valuation
FCF
Audited Audited Audited Audited Audited Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast
FY 2010 FY 2011 FY 2012 FY 2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024
Free Cash Flow 98.6 172.2 270.2 208.6 200.5 244.3 267.6 539.7 786.2 950.1 1,082.1 1,672.5 1,772.8 1,861.5
Terminal Value 37,043.3
PV of FCFF 2,747.5
PV of Terminal Value 16,881.2
Inputs Share Price
Terminal Growth Rate 3.00% Terminal Growth Rate
WACC 8.18%
WACC
102.36 2.25% 2.50% 2.75% 3.00% 3.25% 3.50% 3.75%
6.68% $131.91 $139.02 $147.04 $156.15 $166.59 $178.67 $192.82
Enterprise Vaue 7.18% $115.34 $120.81 $126.90 $133.72 $141.41 $150.14 $160.15
Operating Value 19,628.74 7.68% $101.99 $106.29 $111.03 $116.28 $122.12 $128.66 $136.03
Plus: Non-operating Assets 771.87 8.18% $91.02 $94.47 $98.23 $102.36 $106.91 $111.94 $117.54
Enterprise Value 20,400.61 8.68% $81.88 $84.69 $87.73 $91.03 $94.64 $98.60 $102.96
Less: Debt & Equivalents (143.6) 9.18% $74.17 $76.48 $78.97 $81.66 $84.57 $87.74 $91.21
Equity Value 20,256.97 9.68% $67.59 $69.51 $71.57 $73.79 $76.18 $78.76 $81.55
Basic Shares Outstanding 197.90
Share Price $102.36

21. Valuation: PEG
0.6 0.6
2.9
1.8
2
0
0.5
1
1.5
2
2.5
3
3.5
SWKS AVGO LLTC ADI MXIM
PEG
SWKS AVGO LLTC ADI MXIM
21
Quality Growth Momentum Valuation

22. Valuation: Relative Multiple
22
Quality Growth Momentum Valuation
Comparable Company Multiple Analysis
Enterprise Value EBIT EV/EBIT
Analog Devices 16,653 829.6 20.07
Avago Technologies 33,945 635.0 53.46
Linear Technology Corp. 9,554 682.7 13.99
Mean 29.17
Median 20.07
FCF
Audited Audited Audited Audited Audited Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast
FY 2010 FY 2011 FY 2012 FY 2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024
Free Cash Flow 98.6 172.2) 270.2 208.6 200.5 244.3 267.6 539.7 786.2 950.1 1,082.1 1,672.5 1,772.8 1,861.5
Terminal Value 45,335.15
PV of FCFF 5,361.69
PV of Terminal Value 20,659.96
Inputs Share Price
Terminal Growth Rate 3.00% Terminal Growth Rate
WACC 8.1759099% WACC $134.66 2.25% 2.50% 2.75% 3.00% 3.25% 3.50% 3.75%
6.68% $152.18 $152.47 $152.77 $153.06 $153.35 $153.64 $153.93
Enterprise Vaue 7.18% $145.78 $146.06 $146.34 $146.62 $146.90 $147.17 $147.45
Operating Value 26,021.65 7.68% $139.70 $139.96 $140.23 $140.49 $140.76 $141.02 $141.29
Plus: Non-operating Assets 771.87 8.18% $133.90 $134.16 $134.41 $134.66 $134.92 $135.17 $135.42
Enterprise Value 26,793.52 8.68% $128.39 $128.63 $128.87 $129.11 $129.36 $129.60 $129.84
Less: Debt & Equivalents (143.6) 9.18% $123.14 $123.37 $123.60 $123.83 $124.06 $124.29 $124.52
Equity Value 26,649.88 9.68% $118.14 $118.36 $118.58 $118.80 $119.02 $119.24 $119.46
Basic Shares Outstanding 197.90
Share Price $134.66

23. Target Price: $102.36 vs. Current price: $78.29
Consensus Rating 4.54
Buys 83.3% 20
Holds 12.5% 3
Sells 4.2% 1
12M Target Price $116.40
23
Source: Bloomberg
Source: FactSet

24. Summary
• Rising RF content
• Good financial quality with robust revenue growth,
growing ROE, expanding profit margin & strategic
plan to diversify products
• Recommendation: BUY with target price: $102.35
Investment Risks:
• Operational risk
• Dependent on Apple
• Economic risk
• Another recession
24

25. Thank you!
STOCK RECOMMENDATION FOR HAYLEY LARGE CAP FUND
PREPARED BY THAO PHUONG LE, VILLANOVA MSF’16
Q&A