Qualcomm Inc (QCOM, Financial) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at 119.93, Qualcomm Inc has witnessed a daily gain of 0%, marked against a three-month change of -0.6%. A thorough analysis, underlined by the GF Score, suggests that Qualcomm Inc is well-positioned for substantial growth in the near future.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
Qualcomm Inc's GF Score is broken down as follows:
- Financial strength rank: 7/10
- Profitability rank: 9/10
- Growth rank: 9/10
- GF Value rank: 6/10
- Momentum rank: 8/10
Each one of these components is ranked and the ranks also have positive correlation with the long term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. With high ranks in profitability and growth, and a slightly lower rank in GF Value, GuruFocus assigned Qualcomm Inc the GF Score of 93 out of 100, which signals the highest outperformance potential.
Understanding Qualcomm Inc Business
Qualcomm Inc, with a market cap of $133.48 billion, is a leading player in the technology sector. The company develops and licenses wireless technology and designs chips for smartphones. Its key patents revolve around CDMA and OFDMA technologies, which are standards in wireless communications that are the backbone of all 3G, 4G, and 5G networks. Qualcomm's IP is licensed by virtually all wireless device makers. The firm is also the world's largest wireless chip vendor, supplying nearly every premier handset maker with leading-edge processors. Qualcomm also sells RF-front end modules into smartphones, as well as chips into automotive and Internet of Things markets.
Financial Strength Breakdown
According to the Financial Strength rating, Qualcomm Inc's robust balance sheet exhibits resilience against financial volatility, reflecting prudent management of capital structure. The Interest Coverage ratio for Qualcomm Inc stands impressively at 10.81, underscoring its strong capability to cover its interest obligations. This robust financial position resonates with the wisdom of legendary investor Benjamin Graham, who favored companies with an interest coverage ratio of at least 5. With a favorable Debt-to-Revenue ratio of 0.43, Qualcomm Inc's strategic handling of debt solidifies its financial health.
Profitability Rank Breakdown
The Profitability Rank shows Qualcomm Inc's impressive standing among its peers in generating profit. Qualcomm Inc Operating Margin has increased (691.63%) over the past five years, as shown by the following data: 2019: 31.59; 2020: 26.58; 2021: 29.16; 2022: 35.88; 2023: 21.74. Furthermore, Qualcomm's Gross Margin has seen a consistent rise over the past five years, as evidenced by the data: 2019: 64.57; 2020: 60.67; 2021: 57.51; 2022: 57.84; 2023: 55.70. This trend underscores the company's growing proficiency in transforming revenue into profit.
Growth Rank Breakdown
Ranked highly in Growth, Qualcomm Inc demonstrates a strong commitment to expanding its business. The company's 3-Year Revenue Growth Rate is 15.8%, which outperforms better than 59.79% of 873 companies in the Semiconductors industry. Moreover, Qualcomm Inc has seen a robust increase in its earnings before interest, taxes, depreciation, and amortization (EBITDA) over the past few years. Specifically, the three-year growth rate stands at 9.6, and the rate over the past five years is 34.1. This trend accentuates the company's continued capability to drive growth.
Next Steps
Given Qualcomm Inc's strong financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential outperformance. This makes Qualcomm Inc a compelling investment case for those seeking robust returns. GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
