Qualcomm Incorporated (NASDAQ:QCOM) has emerged as a compelling stock option in our recent stock screening, flagged as potentially undervalued. This analysis dives into why NASDAQ:QCOM presents both a robust financial standing and an appealing valuation for investors. Let’s examine the key factors that contribute to this assessment.
Undervalued stocks analysis for NASDAQ QCOM
NASDAQ QCOM Valuation Metrics: A Detailed Comparison
ChartMill’s proprietary Valuation Rating system, which scores stocks from 0 to 10 based on various valuation factors, assigns NASDAQ:QCOM a strong 7. This rating suggests that when we Nasdaq Qcom Compare against its peers and the broader market, Qualcomm appears attractively priced. Here’s a breakdown:
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Price/Earnings (P/E) Ratio: When we nasdaq qcom compare its P/E ratio to the industry average, QCOM stands out as notably cheaper. It’s more affordable than approximately 85.32% of companies within the same industry. Furthermore, compared to the S&P 500’s average P/E ratio of 29.34, QCOM’s P/E ratio indicates a more favorable valuation.
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Price/Forward Earnings: In a forward-looking nasdaq qcom compare, using Price/Forward Earnings, QCOM remains undervalued. Around 81.65% of industry competitors are pricier based on this metric. While the S&P 500 averages a Price/Forward Earnings ratio of 20.80, QCOM is slightly less expensive, reinforcing its value proposition.
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Enterprise Value to EBITDA: Analyzing the Enterprise Value to EBITDA ratio provides another layer to nasdaq qcom compare. Approximately 77.98% of companies in the same industry have a higher ratio, suggesting QCOM’s relative undervaluation.
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Price/Free Cash Flow: For investors focused on cash generation, the Price/Free Cash Flow ratio is crucial. When we nasdaq qcom compare QCOM’s ratio within its industry, it’s cheaper than 90.83% of its peers, highlighting strong cash flow at a reasonable price.
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PEG Ratio (NY): The low PEG Ratio for QCOM, which adjusts the P/E ratio for expected growth, further supports the argument for an undervalued stock. This metric suggests that QCOM’s price is low relative to its anticipated earnings growth.
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Profitability Justification: QCOM’s exceptional profitability rating may even warrant a higher P/E ratio than it currently holds. This implies the market might not be fully recognizing QCOM’s earning power.
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Earnings Growth Forecast: Projected earnings growth for QCOM is around 15.01% in the coming years. This robust growth expectation further justifies a potentially higher valuation, making its current price even more attractive when we nasdaq qcom compare future potential against present value.
Profitability Analysis: NASDAQ QCOM Outperforms Peers
ChartMill’s Profitability Rating, another proprietary metric graded out of 10, awards NASDAQ:QCOM a near-perfect 9. This high score indicates superior profitability when we nasdaq qcom compare QCOM against its industry. Key highlights include:
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Return on Assets (ROA): QCOM’s ROA of 16.52% surpasses 88.99% of its industry counterparts. This demonstrates efficient asset utilization in generating profits.
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Return on Equity (ROE): With an impressive ROE of 35.31%, QCOM ranks among the industry’s top performers, outperforming 95.41% of its peers. This signifies excellent returns for shareholders’ equity.
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Return on Invested Capital (ROIC): QCOM’s ROIC of 17.50% is also among the best in the industry, exceeding 92.66% of its competitors. This indicates effective capital allocation and high returns on total invested capital.
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Average ROIC (3-Year): Historically, QCOM has maintained a strong average ROIC of 24.51% over the past three years, significantly above the industry average of 10.70%. While there’s a recent dip to 17.50%, the historical performance showcases consistent profitability.
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Profit Margin & Operating Margin: Excellent Profit Margin (23.33%) and Operating Margin (25.50%) values place QCOM in the top tier of its industry, outperforming over 81% and 82% of peers respectively. These margins reflect strong pricing power and efficient operations. Notably, QCOM’s Operating Margin has shown improvement in recent years.
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Gross Margin: QCOM’s Gross Margin of 55.90% is better than 76.15% of its industry peers, further underlining its strong profitability across various margin metrics.
Financial Health Evaluation: NASDAQ QCOM’s Stability
ChartMill’s Health Rating, assessing financial stability on a scale of 0 to 10, gives NASDAQ:QCOM a solid 7. This reflects a healthy financial position. When we nasdaq qcom compare QCOM’s financial health indicators:
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Altman-Z Score: An Altman-Z score of 6.25 indicates a low risk of bankruptcy for QCOM. Compared to the industry, this score is better than 69.72% of companies, suggesting stronger financial stability.
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Debt to FCF Ratio: QCOM’s Debt to Free Cash Flow ratio is remarkably low at 1.16. This means QCOM could theoretically pay off all its debt using just over a year’s worth of free cash flow, an excellent indicator of financial strength. This ratio is better than 74.31% of industry peers.
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Debt/Equity Considerations: While the debt-to-equity ratio might not be exceptionally low, the limited overall debt, well-covered by free cash flow, mitigates concerns. The debt-to-equity figure might be influenced by factors like share buyback programs reducing equity, necessitating further investigation if this were a primary concern.
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Current Ratio: A Current Ratio of 2.39 signifies that QCOM has more than twice the liquid assets to cover its short-term liabilities, indicating strong liquidity and an ability to meet short-term obligations comfortably.
Growth Prospects: Deciphering NASDAQ QCOM’s Potential
ChartMill’s Growth Rating assigns NASDAQ:QCOM a score of 5. While not as high as valuation or profitability, it still indicates decent growth prospects. When we nasdaq qcom compare QCOM’s growth metrics:
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Earnings Per Share (EPS) Growth: QCOM has demonstrated robust historical EPS growth, averaging 19.65% annually over recent years.
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Revenue Growth: Similarly, QCOM has shown strong revenue growth, averaging 9.64% annually over the past years.
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Future EPS Growth: Looking ahead, analysts project a solid EPS growth rate of 10.30% per year for QCOM in the coming years, suggesting continued earnings expansion.
For investors seeking more undervalued stock opportunities, explore our Decent Value screener.
For a comprehensive fundamental analysis, refer to our latest full fundamental report of QCOM.
Disclaimer: This analysis is for informational purposes only and should not be considered financial advice. Investment decisions should be based on your own thorough research and risk assessment. The metrics discussed are based on data available at the time of writing and market conditions can change. Invest responsibly.
