Is the ROE from Skyworks Solutions, Inc. (NASDAQ: SWKS) impressive at 21%?

0
71

[ad_1]

<p class = "canvas-atom canvas-text MB (1.0em) MB (0) – SM MB (0.8em) – SM" type = "text" content = "One of the best investments we can make is in For this reason, this article explains how we can use Return On Equity (ROE) to better understand a company, and to get the practical foundation for this lesson, we use return on investment to better understand Skyworks Solutions, Inc . (NASDAQ: SWKS). "data-reactid =" 27 "> One of the best investments we can make is our own knowledge and skills, so this article explains how we can better use Return on Equity (ROE). Understand a company To anchor the lesson in practice, we use ROE to better understand Skyworks Solutions, Inc. (NASDAQ: SWKS).

<p class = "canvas-atom canvas-text Mb (1,0em) Mb (0) – sm Mt (0,8em) – sm" type = "text" content = "In the last twelve months Skyworks Solutions posted 21% ROE, One way to imagine this is that the company made a profit of $ 0.21 for every dollar of equity it owns. "Data-reactid =" 28 "> In the past twelve months Skyworks Solutions posted 21% ROE, One way to present this is for the company to make a profit of $ 0.21 for every $ 1 of equity.

<p class = "canvas-atom canvas-text Mb (1,0em) Mb (0) – sm Mt (0,8em) – sm" type = "text" content = " Check out our latest analysis for Skyworks Solutions "data-reactid =" 29 "> Check out our latest analysis for Skyworks Solutions

How do I calculate return on equity?

<p class = "canvas-atom canvas-text Mb (1,0em) Mb (0) – sm Mt (0,8em) – sm" type = "text" content = "The Return on equity formula is: "data-reactid =" 31 "> The Return on equity formula is:

Return on equity = net income (from continuing operations) ÷ equity

Or for Skyworks solutions:

21% = $ 854 million ÷ $ 4.1 billion (based on the past twelve months to September 2019)

Most people know that the net profit is the total after all expenses, but the concept of equity is a little more complicated. This is the total amount of money deposited into the company by shareholders plus any retained earnings. Equity can be calculated by subtracting the company's total liabilities from the company's total assets.

What does ROE mean?

<p class = "canvas-atom canvas-text MB (1.0em) MB (0) – SM MB (0.8em) – SM" type = "text" content = "ROE measures the profitability of a company based on profit, it retains The return is the amount earned after taxes in the last 12 months, a higher profit leads to a higher ROE. A high ROE is better than a low one, This means that two companies can be compared with ROE. "Data-reactid =" 37 "> ROE measures the profitability of a company based on the profit and all external investments. The return is the amount achieved after taxes in the past twelve years. A higher profit leads to a higher return on investment. A high ROE is better than a low one, This means that two companies can be compared with ROE.

Does Skyworks Solutions have a good ROE?

Probably the easiest way to measure a company's return on investment is to compare it to the industry average. However, this method is only useful for a rough check, since companies differ considerably within the same industry division. As you can see in the graphic below, Skyworks Solutions has a higher ROE than the average (9.9%) in the semiconductor industry.

NasdaqGS: SWKS Past Revenue and Net Income, January 4, 2020

<p class = "canvas-atom canvas-text Mb (1,0em) Mb (0) – sm Mt (0,8em) – sm" type = "text" content = "This is a good sign. We are holding a high The return on investment alone is usually sufficient to warrant further investigations into a company. A data point to be checked is whether Insiders recently bought shares, "data-reactid =" 52 "> This is a good sign. We believe that a high return on investment is usually sufficient to warrant further investigations into a company. A data point to be checked is whether Insiders recently bought shares,

How does debt affect ROE?

Most companies need money from somewhere to increase their profits. The money for investments can come from the previous year's profit (retained earnings), the issue of new shares or the taking out of loans. In the first and second options, the ROE reflects this use of cash for growth. In the latter case, the use of debt will improve returns but will not change equity. In this way, the use of debt will increase return on investment, although the core economy of the business remains unchanged.

Skyworks Solutions Debt Combination and 21% Return on Equity

Shareholders will be happy to learn that Skyworks Solutions has no net debt! His ROE suggests that it is a decent company. and the fact that returns are not being used indicates that they are worth looking at. Ultimately, a company that has no debt is better able to take advantage of future growth opportunities.

In total

The return on equity is a useful indicator of a company's ability to make profits and return them to shareholders. In my book, the companies with the highest quality have a high return on equity despite the low level of debt. In general, if two companies have the same ROE, I would prefer the one with less debt.

<p class = "canvas-atom canvas-text Mb (1,0em) Mb (0) – sm Mt (0,8em) – sm" type = "text" content = "However, ROE is a useful indicator to get the course right When determining whether to buy a stock, there are a number of factors that are critical to business quality: future earnings growth and future investment needs, and I think it might be worth checking free Company analyst forecast reportEmagazine.credit-suisse.com/app/art … = 157 & lang = DE Although ROE is a useful indicator of company quality, there are a number of factors that need to be considered in order to get the right price to buy one Identify stock Consider other factors such as future earnings growth and future investment needs. I think it's worth checking this out free Company analyst forecast report.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "But note: Skyworks Solutions may not be the best stock to buy, So take a look free List of interesting companies with high ROE and low debt."data-reactid =" 64 "> Please note the following: Skyworks Solutions may not be the best stock to buy, So take a look free List of interesting companies with high ROE and low debt.

<p class = "canvas-atom canvas-text Mb (1,0em) Mb (0) – sm Mt (0,8em) – sm" type = "text" content = "If you discover an error that justifies a correction, please contact the editorial team at editorial-team@simplywallst.com, This article from Simply Wall St is general in nature. It is not a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Simply Wall St has no position in the stocks mentioned.

We strive to provide you with long-term, focused research analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or quality material. Thank you for reading."data-reactid =" 65 ">If you discover an error that justifies a correction, please contact the editorial team at editorial-team@simplywallst.com. This article from Simply Wall St is general in nature. It is not a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Simply Wall St has no position in the stocks mentioned.

We strive to provide you with long-term, focused research analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or quality material. Thank you for reading.