It’s time to break down a semiconductor name that's been in sell mode. Here is the breakdown on $QCOM, otherwise known as Qualcomm.
Current Price: $129.98
52/Wk High: $167.94
52/Wk Low: $58.00
Market Cap: $147.7 Billion
Dividend: $0.65 / 1.97% Yield
Read below for the breakdown!
Qualcomm ($QCOM) is a major semiconductor company that specializes in mobile and wireless device technology with strong exposure to 5G, networking equipment, and much more.
Breaking down the stock price itself according to TREFIS (@trefis) data, 69.2% of Qualcomm’s stock price is based on their Mobile Device Chipset segment.
Furthermore, the Mobile Device Royalties segment makes up 25.7%, Other Initiatives makes up 5%, and 1.9% of the stock price is representative of the net of debt.
In recent news, Qualcomm has been pulled into chip shortage issues that nearly every semiconductor company is experiencing but at the same time has seen soaring demand, especially from Android manufacturers.
While the semiconductor shortage and supply line issues are important, the crisis is expected to end by at the latest the final months of 2021, and with demand soaring it seems now is the right time to buy the fear in the semiconductor names.
Digging into the numbers Qualcomm beat Q1 2021 expectations, delivering an EPS of $2.17, better than the analysts EPS consensus estimate of $2.10. On a year over year basis, EPS grew 119.19%.
Revenues in the first quarter grew by 62% year over year to $8.235 billion driven by strong 5G demand in handsets and IoT technologies.
Breaking down revenues within the QCT segment.
Handsets: $4.216 Billion (Up 79%)
Automotive: $212 Million (Up 44%)
RF Front End: $1.061 Billion (Up 157%)
IoT: $1.044 Billion (Up 48%)
Segment gains on YoY basis.
As for the QTL segment, the segment turned out $1.660 billion in revenues, representing a strong double digit increase in revenues of 18% year over year.
As for net income, Qualcomm reported a strong net income of $2.455 billion for the quarter, representing a 165% increase in net income on a year over year basis.
Operating income increased as well, totaling $2.526 billion for the quarter, much better than the Q1 2020 operating income level of $1.030 billion.
As for guidance, management is bullish for Q2, expecting revenues to land within a range of $7.2 billion to $8.0 billion.
Breaking down guidance, leadership is expecting QCT revenues to be $6 billion to $6.5 billion and for QLT revenues to total $1.25 to $1.45 billion.
Management was upbeat about the quarter.
“We delivered an exceptional quarter, more than doubling earnings year-over-year due to strong 5G demand in handsets and growth in our RF front-end, automotive and IoT adjacencies, which drove record earnings in our chip business,” CEO Steve Mollenkopf said.
Shifting into the balance sheet the numbers are solid.
Total Debt: $15.731 Billion
Total Liabilities: $30.099 Billion
Total Assets: $37.479 Billion
Cash & Short Term Inv: $12.298 Billion
On a valuation basis, Qualcomm trades at a much lower premium than industry peers.
Price to Earnings: 22.20x
Forward Price to Earnings: 16.06x
Price to Sales: 5.53x
Price to Book: 20.01x
Price to Cashflow: 13.06x
Management has been strong.
Return on Equity: 113.14%
Return on Assets: 19.06%
Return on Invested Capital: 25.79%
Given the numbers the analysts are bullish with a mean price target of $171.00/share, representing a 31.56% upside.
The high price target is $200.00/share, representing a 53.87% upside, while the low price target is $150.00/share, representing a 15.40% downside.
The big money is quite involved as well with 74.75% of Qualcomm being owned by institutions. Top holders include The Vanguard Group, BlackRock Institutional Trust, and Fidelity Management & Research.
On a technical basis Qualcomm could be presenting an opportunity. According to the six-month charts the MACD is moving to the downside with minimal momentum around -5.5642.
The six-month charts are also indicating an RSI of 40.04 and CCI of -83.8641 after the stock dropped down to its 200 day moving averages.
In short, Qualcomm ($QCOM) is an excellent company with growing demand, solid positioning in the 5G industry, and a broad customer base that continues to be impressed.
EAT - SLEEP - PROFIT
Disclaimer: This is not direct financial advice, simply an opinion based on independent research.