Qualcomm Rated As A Buy Ahead Of Earnings

By almost any way you could look at it, Qualcomm (QCOM) has had a pretty good run over the past year. The stock rallied from a low of $56.73 in March 2020 to a high of $167.14 in January. Earnings and revenue have seen huge jumps in recent quarters and the company’s profitability measurements are well above average. No wonder the stock gets a “strong buy” rating from Tickeron’s Artificial Intelligence Scorecard.

Qualcomm will look to keep the momentum going when it reports fiscal second-quarter results on April 28. The current consensus estimate is for earnings per share of $1.67 and that is nearly double the $0.88 the company earned in Q2 2020. Revenue is expected to come in at $7.62 billion and that’s up 46.4% from last year.

Those are some pretty lofty growth rates, but they are lower than the growth rates the company saw in Q1. EPS jumped by 119% in the first quarter while revenue jumped 62%. For 2021 as a whole earnings are expected to grow by 74.2% and revenue is expected to jump by 43.1%.

The growth rates from Q1, and the expected growth rates for Q2 and 2021, seem to mark a turning point for Qualcomm. The company had seen earnings grow by 7% per year over the last three years while revenue had grown at an annual rate of 3%.

In addition to the extremely high growth rates in earnings and revenue, Qualcomm’s profitability measurements are also among the best in the industry. The return on equity is incredibly high at 113.1% and the profit margin is above average at 25.2%.

The company also scores well with its Valuation rating. The trailing P/E is only 23.04 and the forward P/E is 20.67. Both of those readings are well below the industry averages. The only area where Qualcomm appears to be priced higher than the industry average is its price/book ratio. The ratio is at 20.74 currently and the average is only 5.01.

Despite Earnings Beat the Stock has Fallen

Qualcomm last reported earnings on February 3 and the company beat its EPS estimate on record earnings. The revenue figure missed estimates slightly. Since that earnings report, the stock has dropped approximately 15% and was down more than 25% at the lows a few weeks ago.

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