As of July 21, 2023, Qualcomm Inc (QCOM, Financial) is experiencing a gain of 3.31%, with its stock price currently at $124.72. The company boasts a market cap of $138.9 billion, earnings per share of $9.32, and sales of $41.1 billion. Based on the GF Value, a unique measure of intrinsic worth, Qualcomm's valuation stands at $168.65, suggesting that the stock is modestly undervalued.
Qualcomm (QCOM, Financial), a leading player in the tech industry, is renowned for developing and licensing wireless technology, as well as designing chips for smartphones. The company's key patents revolve around CDMA and OFDMA technologies, which form the backbone of all 3G, 4G, and 5G networks. Qualcomm's IP is licensed by virtually all wireless device makers, making it a significant player in the industry.
GF Value of Qualcomm (QCOM, Financial)
The GF Value of Qualcomm (QCOM) is a proprietary metric calculated by GuruFocus, 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. Currently, Qualcomm's stock price of $124.72 per share and the market cap of $138.9 billion suggest that the stock is modestly undervalued.
Given this undervaluation, the long-term return of Qualcomm's stock is likely to exceed its business growth. For investors, this could mean potentially higher future returns at reduced risk.
Financial Strength of Qualcomm
Qualcomm's financial strength is a critical aspect to consider for investors to avoid potential capital loss. The company's cash-to-debt ratio stands at 0.42, ranking lower than 80.82% of companies in the Semiconductors industry. Despite this, Qualcomm's overall financial strength is rated 7 out of 10, indicating fair financial health.
Profitability and Growth of Qualcomm
Profitability is a key factor for any investment, and Qualcomm scores high in this regard. The company has been profitable for 9 out of the past 10 years. With an operating margin of 30.91%, Qualcomm ranks better than 93.06% of companies in the Semiconductors industry. The company's average annual revenue growth is 25%, outperforming 77.79% of companies in the industry.
Another critical profitability indicator is the comparison between the company's return on invested capital (ROIC) and the weighted cost of capital (WACC). Qualcomm's ROIC is 31.4, significantly higher than its WACC of 10.29, indicating efficient cash flow generation relative to the capital invested in its business.
Conclusion
In summary, Qualcomm (QCOM, Financial) appears to be modestly undervalued. The company exhibits fair financial strength, strong profitability, and commendable growth. Investors interested in Qualcomm stock can explore its 30-Year Financials here.
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