Qualcomm Inc Valuation – March 2019 #QCOM

Company Profile (excerpt from Reuters): QUALCOMM Incorporated, incorporated on August 15, 1991, is engaged in the development and commercialization of a digital communication technology called code division multiple access (CDMA). The Company is engaged in the development and commercialization of the orthogonal frequency division multiple access (OFDMA) family of technologies, including long-term evolution (LTE), which is an Orthogonal Frequency Division Multiplexing (OFDM)-based standard that uses OFDMA and single-carrier Frequency Division Multiple Access (FDMA), for cellular wireless communication applications. The Company’s segments include QCT (Qualcomm CDMA Technologies), QTL (Qualcomm Technology Licensing) and QSI (Qualcomm Strategic Initiatives). The Company also develops and commercializes a range of other technologies used in handsets and tablets that contribute to end user demand, such as certain audio and video codecs, the wireless local area networks (WLAN) 802.11 functionality and volatile and non-volatile memory controllers. Other technologies used by wireless devices that it has developed include operating systems, user interfaces, graphics and camera processing functionality, integrated circuit packaging techniques, sensors and sensor fusion algorithms and application processor architectures.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of QCOM – March 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $64,787,678,702 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.54 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -78.35% Fail
6. Moderate PEmg Ratio PEmg < 20 41.16 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 18.10 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.54 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.68 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.30
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $18.86
MG Value based on 0% Growth $11.06
Market Implied Growth Rate 16.33%
Current Price $53.53
% of Intrinsic Value N/A

QUALCOMM, Inc. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability or growth over the last ten years, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the net current assets, and the lack of earnings stability or growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $3.73 in 2015 to an estimated $1.3 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 16.33% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into QUALCOMM, Inc. revealed the company was trading above its Graham Number of $7.63. The company pays a dividend of $2.38 per share, for a yield of 4.4%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 41.16, which was above the industry average of 35.5. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-11.72.

QUALCOMM, Inc. scores quite poorly in the ModernGraham grading system, with an overall grade of D.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$11.72
Graham Number $7.63
PEmg 41.16
Current Ratio 1.54
PB Ratio 18.10
Current Dividend $2.38
Dividend Yield 4.45%
Number of Consecutive Years of Dividend Growth 17

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $16,294,000,000
Total Current Liabilities $10,556,000,000
Long-Term Debt $15,388,000,000
Total Assets $34,246,000,000
Intangible Assets $9,041,000,000
Total Liabilities $30,629,000,000
Shares Outstanding (Diluted Average) 1,223,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.40
Sep2018 -$3.32
Sep2017 $1.65
Sep2016 $3.81
Sep2015 $3.22
Sep2014 $4.65
Sep2013 $3.91
Sep2012 $3.51
Sep2011 $2.52
Sep2010 $1.96
Sep2009 $0.95
Sep2008 $1.90
Sep2007 $1.95
Sep2006 $1.44
Sep2005 $1.26
Sep2004 $1.03
Sep2003 $0.51
Sep2002 $0.22
Sep2001 -$0.38
Sep2000 $0.43
Sep1999 $0.16

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.30
Sep2018 $0.83
Sep2017 $3.09
Sep2016 $3.81
Sep2015 $3.73
Sep2014 $3.76
Sep2013 $3.07
Sep2012 $2.49
Sep2011 $1.94
Sep2010 $1.64
Sep2009 $1.49
Sep2008 $1.68
Sep2007 $1.46
Sep2006 $1.10
Sep2005 $0.80
Sep2004 $0.50
Sep2003 $0.22

Recommended Reading:

Other ModernGraham posts about the company

10 Most Overvalued Stocks of the S&P 500 – July 2018
Qualcomm Inc Valuation – May 2018 $QCOM
10 Undervalued Companies for the Defensive Dividend Stock Investor – February 2017
14 Best Stocks for Value Investors This Week – 2/11/17
Qualcomm Inc Valuation – February 2017 $QCOM

Other ModernGraham posts about related companies

Ametek Inc Valuation – March 2019 #AME
Advanced Micro Devices Inc Valuation – February 2019 $AMD
Qorvo Inc Valuation – February 2019 $QRVO
FLIR Systems Inc Valuation – February 2019 $FLIR
NetApp Inc Valuation – February 2019 $NTAP
Applied Materials Inc Valuation – February 2019 $AMAT
Microchip Technology Inc Valuation – February 2019 $MCHP
Broadcom Inc Valuation – February 2019 $AVGO
KLA-Tencor Corp Valuation – January 2019 $KLAC
TE Connectivity Ltd Valuation – January 2019 $TEL

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Qualcomm Inc Valuation – May 2018 $QCOM

Company Profile (excerpt from Reuters): QUALCOMM Incorporated, incorporated on August 15, 1991, is engaged in the development and commercialization of a digital communication technology called code division multiple access (CDMA). The Company is engaged in the development and commercialization of the orthogonal frequency division multiple access (OFDMA) family of technologies, including long-term evolution (LTE), which is an Orthogonal Frequency Division Multiplexing (OFDM)-based standard that uses OFDMA and single-carrier Frequency Division Multiple Access (FDMA), for cellular wireless communication applications. The Company’s segments include QCT (Qualcomm CDMA Technologies), QTL (Qualcomm Technology Licensing) and QSI (Qualcomm Strategic Initiatives). The Company also develops and commercializes a range of other technologies used in handsets and tablets that contribute to end user demand, such as certain audio and video codecs, the wireless local area networks (WLAN) 802.11 functionality and volatile and non-volatile memory controllers. Other technologies used by wireless devices that it has developed include operating systems, user interfaces, graphics and camera processing functionality, integrated circuit packaging techniques, sensors and sensor fusion algorithms and application processor architectures.

QCOM Chart

QCOM data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of QCOM – May 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $85,265,605,984 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 3.60 Pass
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -45.49% Fail
6. Moderate PEmg Ratio PEmg < 20 51.90 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.61 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 3.60 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.59 Pass
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.11
MG Growth Estimate -4.25%
MG Value $3.51
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $16.07
MG Value based on 0% Growth $9.42
Market Implied Growth Rate 21.70%
Current Price $57.51
% of Intrinsic Value 1640.63%

QUALCOMM, Inc. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability or growth over the last ten years, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the lack of earnings stability or growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $3.76 in 2014 to an estimated $1.11 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 21.7% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into QUALCOMM, Inc. revealed the company was trading above its Graham Number of $0. The company pays a dividend of $2.2 per share, for a yield of 3.8%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 51.9, which was above the industry average of 49.78. Finally, the company was trading above its Net Current Asset Value (NCAV) of $3.51.

QUALCOMM, Inc. scores quite poorly in the ModernGraham grading system, with an overall grade of D.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $3.51
Graham Number $0.00
PEmg 51.90
Current Ratio 3.60
PB Ratio 3.61
Current Dividend $2.20
Dividend Yield 3.83%
Number of Consecutive Years of Dividend Growth 15

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2018
Total Current Assets $45,544,000,000
Total Current Liabilities $12,660,000,000
Long-Term Debt $19,361,000,000
Total Assets $64,126,000,000
Intangible Assets $10,111,000,000
Total Liabilities $40,307,000,000
Shares Outstanding (Diluted Average) 1,494,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate -$2.50
Sep2017 $1.65
Sep2016 $3.81
Sep2015 $3.22
Sep2014 $4.65
Sep2013 $3.91
Sep2012 $3.51
Sep2011 $2.52
Sep2010 $1.96
Sep2009 $0.95
Sep2008 $1.90
Sep2007 $1.95
Sep2006 $1.44
Sep2005 $1.26
Sep2004 $1.03
Sep2003 $0.51
Sep2002 $0.22
Sep2001 -$0.38
Sep2000 $0.43
Sep1999 $0.16
Sep1998 $0.09

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.11
Sep2017 $3.09
Sep2016 $3.81
Sep2015 $3.73
Sep2014 $3.76
Sep2013 $3.07
Sep2012 $2.49
Sep2011 $1.94
Sep2010 $1.64
Sep2009 $1.49
Sep2008 $1.68
Sep2007 $1.46
Sep2006 $1.10
Sep2005 $0.80
Sep2004 $0.50
Sep2003 $0.22
Sep2002 $0.08

Recommended Reading:

Other ModernGraham posts about the company

10 Undervalued Companies for the Defensive Dividend Stock Investor – February 2017
14 Best Stocks for Value Investors This Week – 2/11/17
Qualcomm Inc Valuation – February 2017 $QCOM
10 Undervalued Companies for the Defensive Dividend Stock Investor – January 2017
10 Undervalued Companies for the Defensive Dividend Stock Investor – December 2016

Other ModernGraham posts about related companies

Advanced Micro Devices Inc Valuation – May 2018 $AMD
Ametek Inc Valuation – April 2018 $AME
Qorvo Inc Valuation – April 2018 $QRVO
FLIR Systems Inc Valuation – April 2018 $FLIR
NetApp Inc Valuation – April 2018 $NTAP
Applied Materials Inc Valuation – April 2018 $AMAT
Broadcom Inc Valuation – April 2018 $AVGO
Microchip Technology Inc Valuation – April 2018 $MCHP
KLA-Tencor Corp Valuation – March 2018 $KLAC
TE Connectivity Ltd Valuation – March 2018 $TEL

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Qualcomm Inc Valuation – February 2017 $QCOM

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – February 2017.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Qualcomm Inc (QCOM) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): QUALCOMM Incorporated is engaged in the development and commercialization of a digital communication technology called code division multiple access (CDMA). The Company is engaged in the development and commercialization of the orthogonal frequency division multiple access (OFDMA) family of technologies, including long-term evolution (LTE), which is an Orthogonal Frequency Division Multiplexing (OFDM)-based standard that uses OFDMA and single-carrier Frequency Division Multiple Access (FDMA), for cellular wireless communication applications. The Company’s segments include QCT (Qualcomm CDMA Technologies), QTL (Qualcomm Technology Licensing) and QSI (Qualcomm Strategic Initiatives). The Company also develops and commercializes a range of other technologies used in handsets and tablets that contribute to end user demand. The Company’s products principally consist of integrated circuits (chips or chipsets) and system software used in mobile devices and in wireless networks.

QCOM Chart

QCOM data by YCharts

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Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Recent valuations of the components of the Dow Jones Industrial Average are available for free members, including this one of Microsoft Corporation.  In addition, here is a post detailing what can be found within each individual company’s valuation.

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Downloadable PDF version of this valuation:

ModernGraham Valuation of QCOM – February 2017

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $77,563,427,346 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.97 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 131.39% Pass
6. Moderate PEmg Ratio PEmg < 20 13.54 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.53 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.97 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.28 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

EPSmg $3.91
MG Growth Estimate 4.10%
MG Value $65.28
Opinion Fairly Valued
MG Grade B
MG Value based on 3% Growth $56.66
MG Value based on 0% Growth $33.21
Market Implied Growth Rate 2.52%
Current Price $52.89
% of Intrinsic Value 81.02%

QUALCOMM, Inc. qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the low current ratio. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $3.07 in 2013 to an estimated $3.91 for 2017. This level of demonstrated earnings growth supports the market’s implied estimate of 2.52% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into QUALCOMM, Inc. revealed the company was trading above its Graham Number of $44.13. The company pays a dividend of $2.07 per share, for a yield of 3.9%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 13.54, which was below the industry average of 38.13, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-3.59.

QUALCOMM, Inc. performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$3.59
Graham Number $44.13
PEmg 13.54
Current Ratio 1.97
PB Ratio 2.53
Current Dividend $2.07
Dividend Yield 3.91%
Number of Consecutive Years of Dividend Growth 15

[/not-level-free]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2016
Total Current Assets $15,779,000,000
Total Current Liabilities $7,994,000,000
Long-Term Debt $9,935,000,000
Total Assets $52,366,000,000
Intangible Assets $9,024,000,000
Total Liabilities $21,151,000,000
Shares Outstanding (Diluted Average) 1,495,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.10
Sep2016 $3.81
Sep2015 $3.22
Sep2014 $4.65
Sep2013 $3.91
Sep2012 $3.51
Sep2011 $2.52
Sep2010 $1.96
Sep2009 $0.95
Sep2008 $1.90
Sep2007 $1.95
Sep2006 $1.44
Sep2005 $1.26
Sep2004 $1.03
Sep2003 $0.51
Sep2002 $0.22
Sep2001 -$0.38
Sep2000 $0.43
Sep1999 $0.16
Sep1998 $0.09
Sep1997 $0.08

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.91
Sep2016 $3.81
Sep2015 $3.73
Sep2014 $3.76
Sep2013 $3.07
Sep2012 $2.49
Sep2011 $1.94
Sep2010 $1.64
Sep2009 $1.49
Sep2008 $1.68
Sep2007 $1.46
Sep2006 $1.10
Sep2005 $0.80
Sep2004 $0.50
Sep2003 $0.22
Sep2002 $0.08
Sep2001 $0.04

Recommended Reading:

Other ModernGraham posts about the company

10 Undervalued Companies for the Defensive Dividend Stock Investor – July 2016
10 Undervalued Companies for the Defensive Dividend Stock Investor – June 2016
15 Best Stocks For Value Investors This Week – 2/13/16
5 Undervalued Companies for the Defensive Investor Near 52 Week Lows – February 2016
Qualcomm Inc Valuation – February 2016 $QCOM

Other ModernGraham posts about related companies

Jack Henry & Associates Inc Valuation – Initial Coverage $JKHY
Super Micro Computer Inc Valuation – Initial Coverage $SMCI
Teradata Corp Valuation – January 2017 $TDC
Akamai Technologies Inc Valuation – January 2017 $AKAM
Motorola Solutions Inc Valuation – December 2016 $MSI
Science Applications International Corp Valuation – Initial Coverage $SAIC
Acxiom Corporation Valuation – November 2016 $ACXM
ACI Worldwide Inc Valuation – November 2016 $ACIW
Equinix Inc Valuation – August 2016 $EQIX
Qualcomm Inc Valuation – August 2016 $QCOM

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Qualcomm Inc Valuation – August 2016 $QCOM

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Companies Benjamin Graham Would Invest In Today – July 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Qualcomm Inc (QCOM) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): QUALCOMM Incorporated is engaged in the development and commercialization of a digital communication technology called code division multiple access (CDMA). The Company is engaged in the development and commercialization of the orthogonal frequency division multiple access (OFDMA) family of technologies, including long-term evolution (LTE), which is an Orthogonal Frequency Division Multiplexing (OFDM)-based standard that uses OFDMA and single-carrier Frequency Division Multiple Access (FDMA), for cellular wireless communication applications. The Company’s segments include QCT (Qualcomm CDMA Technologies), QTL (Qualcomm Technology Licensing) and QSI (Qualcomm Strategic Initiatives). The Company also develops and commercializes a range of other technologies used in handsets and tablets that contribute to end user demand. The Company’s products principally consist of integrated circuits (chips or chipsets) and system software used in mobile devices and in wireless networks.

QCOM Chart

QCOM data by YCharts

[level-free]
To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
[not-level-free]

Downloadable PDF version of this valuation:

ModernGraham Valuation of QCOM – August 2016

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $93,213,096,468 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 3.07 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 143.75% Pass
6. Moderate PEmg Ratio PEmg < 20 16.50 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.06 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 3.07 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.71 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

QCOM value chart August 2016

EPSmg $3.82
MG Growth Estimate 8.04%
MG Value $93.92
Opinion Undervalued
MG Grade B+
MG Value based on 3% Growth $55.40
MG Value based on 0% Growth $32.48
Market Implied Growth Rate 4.00%
Current Price $63.04
% of Intrinsic Value 67.12%

QUALCOMM, Inc. qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the high PB ratio. The Enterprising Investor has no initial concerns. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $2.49 in 2012 to an estimated $3.82 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 4% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into QUALCOMM, Inc. revealed the company was trading above its Graham Number of $42.34. The company pays a dividend of $1.97 per share, for a yield of 3.1%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 16.5, which was below the industry average of 35.13, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $0.57.

QUALCOMM, Inc. performs fairly well in the ModernGraham grading system, scoring a B+.

Stage 3: Information for Further Research

QCOM charts August 2016

Net Current Asset Value (NCAV) $0.57
Graham Number $42.34
PEmg 16.50
Current Ratio 3.07
PB Ratio 3.06
Current Dividend $1.97
Dividend Yield 3.13%
Number of Consecutive Years of Dividend Growth 14

[/not-level-free]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2016
Total Current Assets $20,979,000,000
Total Current Liabilities $6,843,000,000
Long-Term Debt $10,024,000,000
Total Assets $50,786,000,000
Intangible Assets $9,326,000,000
Total Liabilities $20,139,000,000
Shares Outstanding (Diluted Average) 1,486,000,000

Earnings Per Share History

Next Fiscal Year Estimate $3.83
Sep2015 $3.22
Sep2014 $4.65
Sep2013 $3.91
Sep2012 $3.51
Sep2011 $2.52
Sep2010 $1.96
Sep2009 $0.95
Sep2008 $1.90
Sep2007 $1.95
Sep2006 $1.44
Sep2005 $1.26
Sep2004 $1.03
Sep2003 $0.51
Sep2002 $0.22
Sep2001 -$0.38
Sep2000 $0.43
Sep1999 $0.16
Sep1998 $0.09
Sep1997 $0.08
Sep1996 $0.02

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $3.82
Sep2015 $3.73
Sep2014 $3.76
Sep2013 $3.07
Sep2012 $2.49
Sep2011 $1.94
Sep2010 $1.64
Sep2009 $1.49
Sep2008 $1.68
Sep2007 $1.46
Sep2006 $1.10
Sep2005 $0.80
Sep2004 $0.50
Sep2003 $0.22
Sep2002 $0.08
Sep2001 $0.04
Sep2000 $0.21

Recommended Reading:

Other ModernGraham posts about the company

10 Undervalued Companies for the Defensive Dividend Stock Investor – July 2016
10 Undervalued Companies for the Defensive Dividend Stock Investor – June 2016
15 Best Stocks For Value Investors This Week – 2/13/16
5 Undervalued Companies for the Defensive Investor Near 52 Week Lows – February 2016
Qualcomm Inc Valuation – February 2016 $QCOM

Other ModernGraham posts about related companies

Verisign Inc Valuation – August 2016 $VRSN
Akamai Technologies Inc Valuation – August 2016 $AKAM
Motorola Solutions Inc Valuation – August 2016 $MSI
F5 Networks Inc Valuation – July 2016 $FFIV
Computer Sciences Corp Valuation – July 2016 $CSC
Infosys Ltd Valuation – July 2016 $INFY
Cognizant Technology Solutions Corp Valuation – July 2016 $CTSH
Total System Services Inc Valuation – May 2016 $TSS
Qualcomm Inc Valuation – February 2016 $QCOM
Motorola Solutions Inc Valuation – February 2016 Update $MSI

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Qualcomm Inc Valuation – February 2016 $QCOM

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Companies Benjamin Graham Would Invest In Today – February 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Qualcomm Inc (QCOM) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Qualcomm Incorporated (Qualcomm) is engaged in providing third-generation (3G), fourth-generation (4G) and next-generation wireless technologies. The Company’s products include 2net, AllPlay, Brew, Gobi, Halo, HealthyCircles, Hy-Fi, IPQ, IZat, Pixtronix, Powerline, QChat, QLearn, Small Cells, Snapdragon, Vive, RaptorQ, Vuforia and WiPower. AllPlay helps manufacturers create devices and services. It also helps developers create Android and iPhone operating system (iOS) music streaming applications. The Company’s Brew platform enables feature phone applications, such as gaming, messaging, Web browsing and social networking. Qualcomm Gobi modems connect users devices to 3G, 4G, and 4G long-term evolution (LTE) networks. Qualcomm Halo technology eliminates the need for plug-in cords for recharging in electric and hybrid vehicles. Qualcomm Powerline solutions turn electrical outlets into broadband connection points, creating networks by plugging in.

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ModernGraham Valuation of QCOM

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $64,999,517,101 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 3.13 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 142.29% Pass
6. Moderate PEmg Ratio PEmg < 20 11.48 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.19 Pass
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 3.13 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.72 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

QCOM value chart February 2016

EPSmg $3.80
MG Growth Estimate 7.90%
MG Value $92.28
Opinion Undervalued
MG Value based on 3% Growth $55.06
MG Value based on 0% Growth $32.28
Market Implied Growth Rate 1.49%
Current Price $43.61
% of Intrinsic Value 47.26%

Qualcomm Inc qualifies for both the Enterprising Investor and the more conservative Defensive Investor.  In fact, the company passes all of the requirements of both investor types, a rare accomplishment indicative of the company’s financial strength.  As a result, all value investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research.

As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $2.49 in 2012 to an estimated $3.80 for 2016.  This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.49% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

Stage 3: Information for Further Research

QCOM charts February 2016

Net Current Asset Value (NCAV) $0.23
Graham Number $41.37
PEmg 11.48
Current Ratio 3.13
PB Ratio 2.19
Dividend Yield 4.27%
Number of Consecutive Years of Dividend Growth 14

 

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Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information Dec2015
Total Current Assets $20,338,000,000
Total Current Liabilities $6,503,000,000
Long-Term Debt $9,950,000,000
Total Assets $50,229,000,000
Intangible Assets $9,737,000,000
Total Liabilities $19,988,000,000
Shares Outstanding (Diluted Average) 1,517,000,000

Earnings Per Share History

Next Fiscal Year Estimate $3.76
Sep2015 $3.22
Sep2014 $4.65
Sep2013 $3.91
Sep2012 $3.51
Sep2011 $2.52
Sep2010 $1.96
Sep2009 $0.95
Sep2008 $1.90
Sep2007 $1.95
Sep2006 $1.44
Sep2005 $1.26
Sep2004 $1.03
Sep2003 $0.51
Sep2002 $0.22
Sep2001 -$0.38
Sep2000 $0.43
Sep1999 $0.16
Sep1998 $0.09
Sep1997 $0.08
Sep1996 $0.02

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $3.80
Sep2015 $3.73
Sep2014 $3.76
Sep2013 $3.07
Sep2012 $2.49
Sep2011 $1.94
Sep2010 $1.64
Sep2009 $1.49
Sep2008 $1.68
Sep2007 $1.46
Sep2006 $1.10
Sep2005 $0.80
Sep2004 $0.50
Sep2003 $0.22
Sep2002 $0.08
Sep2001 $0.04
Sep2000 $0.21

Recommended Reading:

Other ModernGraham posts about the company

10 Undervalued Companies for the Defensive Dividend Stock Investor – February 2016
10 Most Undervalued Companies for the Defensive Investor – October 2015
10 Undervalued Companies for the Defensive Dividend Stock Investor – September 2015
10 Most Undervalued Companies for the Defensive Investor – September 2015
5 Undervalued Companies for the Defensive Investor Near 52 Week Lows – September 2015

Other ModernGraham posts about related companies

Motorola Solutions Inc Valuation – February 2016 Update $MSI
Cognizant Technology Solutions Corp Valuation – January 2016 Update $CTSH
Akamai Technologies Inc Valuation – January 2016 $AKAM
Infosys Ltd Valuation – January 2016 Update $INFY
Total System Services Inc. Valuation – November 2015 Update $TSS
International Business Machines Corp Valuation – November 2015 Update $IBM
Motorola Solutions Inc. Valuation – November 2015 Update $MSI
Qualcomm Inc. Valuation – October 2015 Update $QCOM
Cognizant Technology Solutions Corp Analysis – October 2015 Update $CTSH
Infosys Limited Analysis – October 2015 Update $INFY

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Qualcomm Inc. Valuation – October 2015 Update $QCOM

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Most Undervalued Companies for the Defensive Investor – October 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Qualcomm Inc. (QCOM) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): QUALCOMM Incorporated (Qualcomm) designs, manufactures and market digital communications products and services based on Code Division Multiple Access (CDMA), Orthogonal Frequency Division Multiple Access (OFDMA) and other technologies. The Company’s products consist of integrated circuits and system software used in mobile devices and in wireless networks. The Company operates in three segments, including Qualcomm CDMA Technologies (QCT), Qualcomm Technology Licensing (QTL) and Qualcomm Strategic Initiatives (QSI). QCT develops and supplies integrated circuits and system software based on CDMA, OFDMA and other technologies. QTL segment provides rights to use portions of its property portfolio. QSI segment is focused on opening new opportunities for its technologies.

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To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
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Downloadable PDF version of this valuation:

ModernGraham Valuation of QCOM – October 2015

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $92,622,373,247 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 4.26 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 120.42% Pass
6. Moderate PEmg Ratio PEmg < 20 15.97 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.89 Pass
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 4.26 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.50 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

QCOM value Chart October 2015

EPSmg $3.69
MG Growth Estimate 13.60%
MG Value $131.78
Opinion Undervalued
MG Value based on 3% Growth $53.52
MG Value based on 0% Growth $31.38
Market Implied Growth Rate 3.73%
Current Price $58.95
% of Intrinsic Value 44.73%

Qualcomm Inc. qualifies for the both the Defensive Investor and the Enterprising Investor.  The company passes all of the requirements of both investor types, a rare accomplishment indicative of the company’s strong financial position.  As a result, all value investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company.

As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $1.94 in 2011 to an estimated $3.69 for 2015.  This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.73% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Qualcomm Inc. (QCOM)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Stage 3: Information for Further Research

QCOM Charts October 2015

Net Current Asset Value (NCAV) $4.20
Graham Number $38.39
PEmg 15.97
Current Ratio 4.26
PB Ratio 2.89
Dividend Yield 2.95%
Number of Consecutive Years of Dividend Growth 13

 

[/not-level-free]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Total Current Assets $25,928,000,000
Total Current Liabilities $6,083,000,000
Long-Term Debt $9,913,000,000
Total Assets $52,295,000,000
Intangible Assets $6,664,000,000
Total Liabilities $19,093,000,000
Shares Outstanding (Diluted Average) 1,629,000,000

Earnings Per Share History

Next Fiscal Year Estimate $3.10
Sep14 $4.65
Sep13 $3.91
Sep12 $3.51
Sep11 $2.52
Sep10 $1.96
Sep09 $0.95
Sep08 $1.90
Sep07 $1.95
Sep06 $1.44
Sep05 $1.26
Sep04 $1.03
Sep03 $0.51
Sep02 $0.22
Sep01 -$0.38
Sep00 $0.43
Sep99 $0.16
Sep98 $0.09
Sep97 $0.08
Sep96 $0.02

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $3.69
Sep14 $3.76
Sep13 $3.07
Sep12 $2.49
Sep11 $1.94
Sep10 $1.64
Sep09 $1.49
Sep08 $1.68
Sep07 $1.46
Sep06 $1.10
Sep05 $0.80
Sep04 $0.50
Sep03 $0.22
Sep02 $0.08
Sep01 $0.04
Sep00 $0.21
Sep99 $0.09

Recommended Reading:

Other ModernGraham posts about the company

10 Most Undervalued Companies for the Defensive Investor – October 2015
10 Undervalued Companies for the Defensive Dividend Stock Investor – September 2015
10 Most Undervalued Companies for the Defensive Investor – September 2015
5 Undervalued Companies for the Defensive Investor Near 52 Week Lows – September 2015
10 Undervalued Companies for the Defensive Dividend Stock Investor – August 2015

Other ModernGraham posts about related companies

Infosys Limited Analysis – October 2015 Update $INFY
Teradata Corporation Analysis – September 2015 Update $TDC
Akamai Technologies Inc. Analysis – August 2015 Update $AKAM
Total System Services Inc. Analysis – August 2015 Update $TSS
Acxiom Corporation Analysis – Initial Coverage $ACXM
ACI Worldwide Inc. Analysis – Initial Coverage $ACIW
Motorola Solutions Inc. Analysis – July 2015 Update $MSI
Qualcomm Inc. Analysis – July 2015 Update $QCOM
Cognizant Technology Solutions Corp Analysis – July 2015 Update $CTSH
Equinix Inc. Analysis – Initial Coverage $EQIX

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Qualcomm Inc. Analysis – July 2015 Update $QCOM

500px-QualcommLogo.svg

Qualcomm Inc. passes the initial requirements of both the Defensive Investor and the Enterprising Investor. In fact, neither investor type has any initial concerns, which is indicative of the company’s strong financial position. As a result, all value investors should feel very comfortable proceeding to the next part of the analysis, which is a determination of the company’s intrinsic value.

When it comes to that valuation, it is critical to consider the company’s earnings history. In this case, it has grown its EPSmg (normalized earnings) from $1.94 in 2011 to an estimated $3.87 for 2015. This level of demonstrated growth outpaces the market’s implied estimate for annual earnings growth of 3.69% over the next 7-10 years.

In recent years, the company’s actual growth in EPSmg has averaged around 20% annually. The ModernGraham valuation model reduces the actual growth to a more conservative figure when making an estimate, but still returns an estimate of intrinsic value well above the current price, indicating that Qualcomm Inc. is undervalued at the present time.

Read the full valuation on Guru Focus!


Disclaimer: The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours. Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

Qualcomm Inc. Quarterly Valuation – April 2015 $QCOM

500px-QualcommLogo.svgQualcomm Inc. (QCOM) has shown very strong earnings and dividend growth over the last several years, which will immediately intrigue many investors. However, Benjamin Graham, the father of value investing, taught that investors must take emotion out of the equation, as the most important aspect to consider is whether the company is trading at a discount relative to its intrinsic value. It is through a thorough fundamental analysis that the investor is able to make a determination about a potential investment’s merits. Here is a look at how the company fares in the ModernGraham valuation model.

The model is inspired by the teachings of Benjamin Graham, and considers numerous metrics intended to help the investor reduce risk levels. The first part of the analysis is to determine whether the company is suitable for the very conservative Defensive Investor or the less conservative Enterprising Investor, who is willing to spend a greater amount of time conducting further research.

In addition, Graham strongly suggested that investors avoid speculation in order to remove the subjective elements of emotion. This is best achieved by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another. By using the ModernGraham method, one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.

QCOM Chart

QCOM data by YCharts

Defensive Investor – Must pass at least 6 of the following 7 tests: Score = 7/7

  1. Adequate Size of Enterprise – Market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – Current ratio greater than 2 – PASS
  3. Earnings Stability – Positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – Has paid a dividend for at least 10 straight years – PASS
  5. Earnings Growth – Earnings per share has increased by at least 1/3 over the last 10 years, using 3-year averages at the beginning and end of the period – PASS
  6. Moderate PEmg (price over normalized earnings) ratio – PEmg is less than 20 – PASS
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – PASS

Enterprising Investor – Must pass at least 4 of the following 5 tests or be suitable for a Defensive Investor: Score = 5/5

  1. Sufficiently Strong Financial Condition, Part 1 – Current ratio greater than 1.5 – PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt-to-Net Current Assets ratio less than 1.1 – PASS
  3. Earnings Stability – Positive earnings per share for at least 5 years – PASS
  4. Dividend Record – Currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $67.26
MG Value $152.13
MG Opinion Undervalued
Value Based on 3% Growth $57.29
Value Based on 0% Growth $33.59
Market Implied Growth Rate 4.26%
Net Current Asset Value (NCAV) $7.79
PEmg 17.02
Current Ratio 3.55
PB Ratio 2.92

Balance Sheet – December 2014

Current Assets $22,761,000,000
Current Liabilities $6,405,000,000
Total Debt $0
Total Assets $48,447,000,000
Intangible Assets $6,910,000,000
Total Liabilities $9,624,000,000
Outstanding Shares 1,686,000,000

Earnings Per Share

2015 (estimate) $3.88
2014 $4.65
2013 $3.91
2012 $3.51
2011 $2.52
2010 $1.96
2009 $0.95
2008 $1.90
2007 $1.95
2006 $1.44
2005 $1.26

Earnings Per Share – ModernGraham

2015 (estimate) $3.95
2014 $3.76
2013 $3.07
2012 $2.49
2011 $1.94
2010 $1.64

Dividend History

QCOM Dividend Chart

QCOM Dividend data by YCharts

Conclusion

Qualcomm Inc. performs well in the ModernGraham model, and is suitable for both Defensive Investors and Enterprising Investors. In fact, the company passes all of the requirements of both investor types, which is a rare accomplishment. As a result, value investors should feel very comfortable proceeding to the next part of the analysis, which is a determination of the company’s intrinsic value.

When it comes to valuation, it is critical to consider the company’s earnings history. In this case, the company has grown its EPSmg (normalized earnings) from $1.94 in 2011 to an estimated $3.95 for 2015. This is a strong level of demonstrated growth, which is well above the market’s implied estimate of 4.26% annual earnings growth over the next 7-10 years. The ModernGraham valuation model reduces the historical growth to a more conservative figure, assuming that some slowdown will occur, but still estimates a growth figure much higher than the market’s implied rate. Therefore, the model returns an estimate of intrinsic value well above the current price, indicating the company is significantly undervalued at the present time.

Qualcomm Inc. Quarterly Valuation – January 2015 $QCOM

500px-QualcommLogo.svg

Qualcomm passes the initial requirements of both the Defensive Investor and the Enterprising Investor. The only issue the Defensive Investor has with the company is the high PB ratio, while the Enterprising Investor has no initial concerns. As a result, all value investors should feel very comfortable proceeding to the next part of the analysis, which is a determination of the company’s intrinsic value.

When it comes to that valuation, it is critical to consider the company’s earnings history. In this case, the company has grown its EPSmg (normalized earnings) from $1.64 in 2010 to $3.76 for 2014. This is a very strong level of demonstrated growth which is well above the market’s implied estimate for earnings growth of only 5.35% over the next 7-10 years. In fact, the historical growth is around 25.8% per year, so the market is expecting a very significant drop in earnings growth. The ModernGraham valuation model reduces the historical growth to a more conservative figure, assuming that some slowdown will occur, and therefore returns an estimate of intrinsic value falling above the current price, indicating the company is undervalued at the present time.

Be sure to check out previous ModernGraham valuations of Qualcomm Inc. (QCOM) for greater perspective!

Read the full valuation on Seeking Alpha!

QCOM Chart

QCOM data by YCharts

Disclaimer:  The author did not hold a position in Qualcomm Inc. (QCOM) at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

Qualcomm Inc. Quarterly Stock Valuation – October 2014 $QCOM

500px-QualcommLogo.svgQualcomm is a great company for both Defensive Investors and Enterprising Investors. The Defensive Investor only has one initial concern, which is the high PB ratio, and the Enterprising Investor has no initial concerns. Both investor types should feel very comfortable proceeding to the next part of the analysis, which is a determination of the company’s intrinsic value.

The company has grown its EPSmg (normalized earnings) from $1.64 in 2010 to an estimated $3.93 for 2014. This demonstrates the company has achieved a strong level of growth, a fact supported by the company’s growth in regular EPS from an average of $1.55 for the period of 2005-07 to an average of $4.11 for the period of 2012-14. This strong level of demonstrated historical growth leads the ModernGraham valuation model to estimate a growth rate of 15% over the next 7-10 years. Though this is a high figure, and is actually the maximum growth rate the model will churn out, it is nearly half the growth rate the company has achieved during the historical period. As a result, the company could see a significant downturn in its growth and still achieve the ModernGraham growth estimate.

The model then utilizes Graham’s formula to return an estimate of intrinsic value of $151.38, which is well above the market’s current price of the company. Value investors are therefore encouraged to proceed with further research to determine whether Qualcomm Inc. is suitable for their own individual portfolios.

Read the full valuation on Seeking Alpha!

QCOM Chart

QCOM data by YCharts

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