SkyWater Technology: recent returns and business mix

SkyWater Technology (SKYT) has attracted attention after a sharp move in its share price over the past year, with a 1 year total return above 200% and a past 3 months return near 50%.

The company, valued at about US$1.34b and recently closing at US$27.00, reports US$442.139m in revenue and net income of US$118.91m, with operations split between its Legacy SkyWater and SkyWater Texas segments.

Recent trading has cooled slightly, with a 30 day share price return of 6.25% decline and a 7 day share price return of 1.96% decline. However, the 1 year total shareholder return above 280% points to strong underlying momentum.

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With SkyWater now valued around US$1.34b, trading at US$27.00 and sitting roughly 30% below an analyst price target of US$35.00, the key question is whether that gap signals mispricing or if markets already reflect future growth.

Most Popular Narrative: 23% Undervalued

With SkyWater Technology last closing at $27.00 against a narrative fair value of $35.00, the current setup hinges on how durable its growth and margins prove to be under a higher required return of about 11%.

SkyWater's expansion into quantum computing and advanced packaging, including the upcoming rollout of a superconducting platform and Florida advanced packaging operations, positions the company at the forefront of high-growth technology segments supported by national security and industrial policy trends, laying the foundation for above-market revenue growth and long-term margin expansion.

Want to know what kind of revenue path and margin reset are baked into that fair value, and how the future earnings multiple is expected to evolve over time? The full narrative breaks down the exact growth curve and profitability profile that underpin the $35.00 figure.

Result: Fair Value of $35 (UNDERVALUED)

However, the story can quickly change if Fab 25 integration drags on margins or if government and defense contract delays affect SkyWater’s revenue visibility.

Another View: P/E Ratios Send A Different Signal

The fair value narrative leans on long term growth and margin assumptions, but today’s P/E tells a more mixed story. SkyWater trades at 10.9x earnings, below the US market at 18.1x and well below the US Semiconductor industry at 38.2x, yet above its 8.1x fair ratio.

That gap suggests the market is already paying a premium to the fair ratio while still pricing in a discount to sector peers, which can cut both ways if sentiment or earnings quality shift. The real question is whether you think SkyWater grows into those peer P/E levels or drifts closer to its fair ratio.

Next Steps

With sentiment split between strong past returns and questions about what comes next, it makes sense to review the figures yourself and move quickly while the story is still forming, then weigh up the 3 key rewards and 3 important warning signs

Looking for more investment ideas?

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• Target steadier opportunities by reviewing companies with resilient balance sheets and solid fundamentals through the solid balance sheet and fundamentals stocks screener (39 results).
• Hunt for quality at a discount by checking out companies flagged as potentially mispriced in the 61 high quality undervalued stocks.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.