On July 22, 2023, Qualcomm Inc (QCOM, Financial) witnessed a gain of 3.31%, with its stock price reaching $124.72. This leading wireless technology and chip designer company has a market cap of $138.9 billion, and it reported sales of $41.1 billion. The intrinsic GF Value of Qualcomm, calculated at $168.55, suggests that the stock is modestly undervalued.
Qualcomm (QCOM, Financial) is a key player in the wireless technology landscape, holding patents central to CDMA and OFDMA technologies - the backbone of 3G, 4G, and 5G networks. Virtually all wireless device manufacturers license Qualcomm's intellectual property. The company is also the world's largest wireless chip vendor and supplies leading-edge processors to premier handset makers. Qualcomm's operations extend to selling RF-front end modules for smartphones and chips for automotive and Internet of Things markets.
GF Value of Qualcomm (QCOM, Financial)
The GF Value is a unique indicator of a stock's intrinsic worth, calculated based on historical trading multiples, an adjustment factor from GuruFocus based on past performance and growth, and estimates of future business performance. The GF Value Line represents the fair value at which the stock should ideally be traded. The current price of Qualcomm stock and the market cap suggest that it is modestly undervalued. As a result, the long-term return of Qualcomm stock is likely to be higher than its business growth.
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Financial Strength of Qualcomm (QCOM, Financial)
Investors must carefully review a company's financial strength before deciding whether to buy shares. Qualcomm has a cash-to-debt ratio of 0.42, which ranks worse than 80.82% of companies in the Semiconductors industry. Based on this, GuruFocus ranks Qualcomm’s financial strength as 7 out of 10, suggesting a fair balance sheet.
Profitability of Qualcomm (QCOM, Financial)
Qualcomm has been profitable 9 years over the past 10 years. During the past 12 months, the company had revenues of $41.1 billion and Earnings Per Share (EPS) of $9.32. Its operating margin of 30.91% is better than 93.06% of companies in the Semiconductors industry. Overall, GuruFocus ranks Qualcomm’s profitability as strong.
Growth of Qualcomm (QCOM, Financial)
The 3-year average annual revenue growth of Qualcomm is 25%, which ranks better than 77.79% of companies in the Semiconductors industry. The 3-year average EBITDA growth rate is 24.9%, which ranks better than 52.92% of companies in the Semiconductors industry.
ROIC vs WACC of Qualcomm (QCOM, Financial)
Over the past 12 months, Qualcomm’s Return on Invested Capital (ROIC) was 31.4, while its Weighted Average Cost of Capital (WACC) came in at 10.31. If the ROIC is higher than the WACC, it indicates that the company is creating value for shareholders.
Conclusion
In conclusion, the stock of Qualcomm (QCOM, Financial) appears to be modestly undervalued. The company's financial condition is fair, and its profitability is strong. Its growth ranks better than 52.92% of companies in the Semiconductors industry. To learn more about Qualcomm stock, you can check out its 30-Year Financials here.
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