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QUALCOMM

Nasdaq:QCOM
Snowflake Description

6 star dividend payer and fair value.

The Snowflake is generated from 30 checks in 5 different areas, read more below.
QCOM
Nasdaq
$79B
Market Cap
Semiconductors
Company description

QUALCOMM Incorporated develops, designs, manufactures, and markets digital communications products and services in China, South Korea, Taiwan, the United States, and internationally. More info.


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3 Month History
QCOM
Industry
5yr Volatility vs Market

Value

 Is QUALCOMM undervalued based on future cash flows and its price relative to the stock market?

Value is all about what a company is worth versus what price it is available for. If you went into a grocery store and all the bananas were on sale at half price, they could be considered undervalued.
INTRINSIC VALUE BASED ON FUTURE CASH FLOWS
Here we compare the current share price of QUALCOMM to its discounted cash flow value.

The discounted cash flow value is simply looking at what the company is worth today, based on estimates of how much money it is expected to make in the future.

How is this discounted cash flow calculated?

  • The current share price of QUALCOMM is above its future cash flow value.
Often investors are willing to pay a premium for a company that has a high dividend or the potential for future growth.
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for it. This is similar to the price of fruit (e.g. Mangoes or Avacados) increasing when they are out of season, or how much your home is worth.

The amount the stock market is willing to pay for QUALCOMM's earnings, growth and assets is considered below, and whether this is a fair price.
Price based on past earnings
Are QUALCOMM's earnings available for a low price, and how does this compare to other companies in the same industry?
  • Good value based on earnings compared to the Semiconductors industry average.
  • Good value based on earnings compared to the overall market.
Price based on expected Growth
Does QUALCOMM's expected growth come at a high price?
  • No forecast or negative expected growth next year.
Price based on value of assets
What value do investors place on QUALCOMM's assets?
  • Good value based on assets compared to the Semiconductors industry average.
X
Value checks
We assess QUALCOMM's value by looking at:
  1. Is the discounted cash flow value less than 20%, or 40% of the share price? (2 checks) (Click here or on bar chart for details of DCF calculation.)
  2. Is the PE ratio less than the market average, and/ or less than the Semiconductors industry average (and greater than 0)? (2 checks)
  3. Is the PEG ratio within a reasonable range (0 to 1)? (1 check)
  4. Is the PB ratio less than the Semiconductors industry average (and greater than 0)? (1 check)
  5. QUALCOMM has a total score of 3/6, see the detailed checks below.

    Note: We use GAAP Earnings per Share in all our calculations including PE and PEG Ratio.
    Note 2: PEG ratio is based on analysts EPS growth expectations in 1 year (-2.97%).

    Full details on the Value part of the Simply Wall St company analysis model.
X
Discounted cash flow (Free cash flow to Equity)

The calculations below outline how an intrinsic value for QUALCOMM is arrived at by discounting future cash flows to their present value. We use analyst's estimates of cash flows going forward 5 years.

See our documentation to learn about this calculation.

5 year cash flow forecast

Present value of next 5 years cash flows:
$21,331

Terminal Value

Terminal Value = FCF2021 × (1 + g) ÷ (Discount Rate – g)

Terminal Value = $6,264 × (1 + 2.3%) ÷ (9.55% – 2.3%)

Terminal value based on the Perpetuity Method where growth (g) = 2.3%:
$88,732

Present value of terminal value:
$56,227

Equity Value

Equity Value (Total value) = Present value of next 5 years cash flows + terminal value

Value = Total value / Shares Outstanding ($77,559 / 1,475)

Value per share:
$52.59

Current discount (share price of $53.27): -1%



Estimate of Discount Rate

The discount rate, or required rate of return, is estimated by calculating the Cost of Equity.

Discount rate = Cost of Equity = Risk Free Rate + (Levered Beta * Equity Risk Premium)

Discount rate = 9.55% = 2.33% + (0.942 * 7.67%)



Estimate of Bottom Up Beta

The Levered Beta is the Unlevered Beta adjusted for financial leverage. It is limited to 0.8 to 2.0 (practical range for a stable firm).

Levered Beta = Unlevered beta (1 + (1- tax rate) (Debt/Equity))

0.942 = 0.788 (1 + (1- 30%) (27.88%))

Levered Beta used in calculation = 0.942



Assumptions
  1. The risk free rate of 2.33% is from the 10 year government bond rate in US.
  2. The bottom-up beta is estimated by analysing other companies in the same industry.
  3. The Equity Risk Premium is calculated by subtracting the risk free rate from the market return premium (10%) (source: Buffet).
  4. The dividend discount model is automatically used for companies in the following industries: Banks, Insurance, Real Estate Investment Trusts (REITs), Diversified Financial Services and Capital Markets.

Future Performance

 How is QUALCOMM expected to perform in the next 1 to 3 years based on estimates from 20 analysts?

    The future performance of a company is measured in the same way as past performance, by looking at estimated growth and how much profit it is expected to make.

    Future estimates come from professional analysts. Just like forecasting the weather, they don’t always get it right!
    3 year growth
    -3%
    Expected earnings growth over 1 year.
    Future Earnings growth analysis
    Is QUALCOMM expected to grow at an attractive rate? We look at the 1 year and 3 year growth below.

    Are QUALCOMM's annual earnings growth expected to exceed 3.4% over the next 3 years?

    • Earnings are expected to decrease over the next year.
    • + 3 year earnings data not available.
    1 & 3 year estimated growth in earnings
    Past and Future Earnings per Share
    The accuracy of the analysts who estimate the future performance data can be gauged below. We look back 3 years and see if they were any good at predicting what actually occured. We also show the highest and lowest estimates looking forward to see if there is a wide range.
    Analysts growth expectations
    2 year growth check
    Super high growth metrics x1.5?

    Which of the these is expected to increase by over 50% in 2 year's time?

    • Revenue
    • Cash flow
    • Profit
    Performance in 3 years
    In the same way as past performance we look at the future estimated return (profit) compared to the available funds. We do this looking forward 3 years.
    • QUALCOMM is not expected to perform strongly, Return on Equity (ROE) in 3 years is estimated to be below 20%.

    Improvement & Relative to industry
    • Expected to be less than the Semiconductors industry average.
    • An improvement in QUALCOMM's performance (ROE) is expected over the next 3 years.
    X
    Future performance checks
    We assess QUALCOMM's future performance by looking at:
    1. Is the growth in earnings expected to beat the low risk savings rate, plus a premium to keep pace with inflation, in 1 year and 3 years? (2 checks)
    2. Does the average analyst expect Revenue to increase by 50% or more in 2 years? (1 check)
    3. Does the average analyst expect Operating Cash Flow to increase by 50% or more in 2 years? (1 check)
    4. Does the average analyst expect Net Income (Profit) to increase by 50% or more in 2 years? (1 check)
    5. Is the Return on Equity in 3 years expected to be over 20%? (1 check)
    Some of the above checks will fail if the company is expected to be loss making in the relevant year.
    QUALCOMM has a total score of 2/6, see the detailed checks below.

    Note: If no +3 year data is available, +2.5 year data may be used.

    Note 2: We use GAAP per Share in all our calculations.

    Full details on the Future part of the Simply Wall St company analysis model.

    Past Performance

     How has QUALCOMM performed over the past 5 years?

    The past performance of a company can be measured by how much growth it has experienced and how much profit it makes relative to the funds and assets it has available.
    Past earnings growth
    Below we compare QUALCOMM's growth in the last year to its industry (Semiconductors).
    Past Earnings growth analysis
    We also check if the company has grown in the past 5 years, and whether it has maintained that growth in the year.
    • QUALCOMM's earnings growth has not matched the industry average in the past year.
    • QUALCOMM's 1 year earnings growth is negative.
    • QUALCOMM earnings have fallen over the past 5 years.
    Profit History
    QUALCOMM's revenue and profit over the past 5 years is shown below, any years where they have experienced a loss will show up in red.
    Performance last year
    We want to ensure a company is making the most of what it has available. This is done by comparing the return (profit) to a company's available funds, assets and capital.
    • Poor return on shareholders funds (ROE) last year.
    • QUALCOMM performed worse than the Semiconductors industry average based on return on assets (ROA) last year.
    • Performance based on revenue producing assets (ROCE) has been diminishing over 3 years.
    X
    Past performance checks
    We assess QUALCOMM's performance over the past 5 years by checking for:
    1. Has earnings per share (EPS) increased in past 5 years? (1 check)
    2. Has the EPS growth in the last year exceeded that of the Semiconductors industry? (1 check)
    3. Is the current EPS growth higher than the average annual growth over the past 5 years? (1 check)
    4. Is the Return on Equity (ROE) higher than 20%? (1 check)
    5. Is the Return on Assets (ROA) above industry average? (1 check)
    6. Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
    The above checks will fail if the company has reported a loss in the most recent earnings report. Some checks require at least 3 or 5 years worth of data.
    QUALCOMM has a total score of 0/6, see the detailed checks below.

    Note: We use GAAP Earnings per Share in all our calculations.

    Full details on the Past part of the Simply Wall St company analysis model.

    Health

     How is QUALCOMM's financial health and their level of debt?

    A company's financial position is much like your own financial position, it includes everything you own (assets) and owe (liabilities).

    The boxes below represent the relative size of what makes up QUALCOMM's finances.

    The net worth of a company is the difference between its assets and liabilities.
    Net Worth
    • QUALCOMM is able to meet its short term (1 year) commitments with its holdings of cash and other short term assets.
    • QUALCOMM's cash and other short term assets cover its long term commitments.
    Balance sheet
    This treemap shows a more detailed breakdown of QUALCOMM's finances. If any of them are yellow this indicates they may be out of proportion and red means they relate to one of the checks below.
    Assets
    Liabilities and shares
    The 'shares' portion represents any funds contributed by the owners (shareholders) and any profits.
    • Low level of unsold assets
    • Total debt is covered by short term assets.
    Historical Debt
    Nearly all companies have debt. Debt in itself isn’t bad, however if the debt is too high, or the company can’t afford to pay the interest on its debts this may have impacts in the future.

    The graphic below shows equity (available funds) and debt, we ideally want to see the red area (debt) decreasing.

    If there is any debt we look at the companies capability to repay it, and whether the level has increased over the past 5 years.
    • The level of debt (70%) compared to net worth is high (greater 40%).
    • The level of debt compared to net worth has increased over the past 5 years (4% vs 70% today).
    • Total debt is not well covered by annual operating cash flow (less than 20% of total debt).
    • Company earns more interest than it pays.
    X
    Financial health checks
    We assess QUALCOMM's financial health by checking for:
    1. Are short term assets greater than short term liabilities? (1 check)
    2. Are short term assets greater than long term liabilities? (1 check)
    3. Has the debt to equity ratio increased in the past 5 years? (1 check)
    4. Is the debt to equity ratio over 40%? (1 check)
    5. Is the debt covered by short term assets? (1 check)
    6. Are earnings greater than 5x the interest on debt (if comapany pays interest at all)? (1 check)
    7. QUALCOMM has a total score of 3/6, see the detailed checks below.


    Full details on the Health part of the Simply Wall St company analysis model.

    Dividends

     What is QUALCOMM's current dividend yield, its reliability and sustainability?

    Dividends are regular cash payments to you from the company, similar to a bank paying you interest on a savings account.
    Annual Dividend Income
    Dividend payments
    4.13%
    Current annual income from QUALCOMM dividends. Estimated to be 4.35% next year.
    If you bought $2,000 of QUALCOMM shares you are expected to receive $83 in your first year as a dividend.
    Dividend Amount
    Here we look how much dividend is being paid, if any. Is it above what you can get in a savings account? It is up there with the best dividend paying companies?
    • Paying above low risk savings rate. (2.25%)
    • Paying above the markets top dividend payers. (3.18%)
    Upcoming dividend payment

    Purchase QUALCOMM on or before the 'Buy Limit' to receive their next dividend payment.

    Dividends are usually paid every 3 or 6 months, you can time your share purchase to take advantage of upcoming dividend payments.
    Dividend payment calendar
    Historical dividend yield
    It is important to see if the dividend for a company is stable, and not wildly increasing/decreasing each year. This graph shows you the historical rate to count toward your assessment of the stock.

    We also check to see if the dividend has increased in the past 10 years.
    • Dividends per share have been stable in the past 10 years.
    • Dividends per share have increased over the past 10 years.
    Current Payout to shareholders
    What portion of QUALCOMM's earnings are paid to the shareholders as a dividend.
    • Dividends paid are covered by net profit (1.2x coverage).
    Future Payout to shareholders
    • Dividends after 3 years are expected to be covered by net profit (1.8x coverage).
    X
    Income/ dividend checks
    We assess QUALCOMM's dividend by checking for:
    1. Firstly is the company paying a notable dividend (greater than 0.5%) - if not then the rest of the checks are ignored.
    2. Current dividend yield, is there one at all, is it higher than the low risk savings rate, and is it above the top 25% of dividend payers? (2 checks)
    3. Have they paid a dividend for 10 years, and during this period has the dividend been volatile (drop of more than 25%)? (1 check)
    4. If they have paid a dividend for 10 years has it increased in this time? (1 check)
    5. How sustainable is the dividend, can QUALCOMM afford to pay it from its earnings today and in 3 years (Payout ratio less than 90%)? (2 checks)
    6. QUALCOMM has a total score of 6/6, see the detailed checks below.


    Full details on the Dividends part of the Simply Wall St company analysis model.

    Management

     What is the CEO of QUALCOMM's salary, the management and board of directors tenure and is there insider trading?

    Management is one of the most important areas of a company. We look at unreasonable CEO compensation, how long the team and board of directors have been around for and insider trading.
    CEO
    Steve Mollenkopf, image provided by Google.
    Steve Mollenkopf
    COMPENSATION$11,066,012
    AGE48
    CEO Bio

    Mr. Steven M. Mollenkopf, also known as Steve, has been the Chief Executive Officer of QUALCOMM Incorporated since March 04, 2014. Mr. Mollenkopf serves as a Member of Qualcomm’s executive committee, helps to drive Qualcomm’s overall global strategy. Mr. Mollenkopf served as an Executive Vice President of QUALCOMM Incorporated from May 2008 to November 12, 2011 and its President and Chief Operating Officer from November 12, 2011 to March 4, 2014. He served as the Group President of Qualcomm CDMA Technologies (QCT) from September 2010 to October 2010 and served as its Executive Vice President from May 2008 to November 12, 2011. He served as an Executive Vice President of QCT Product Management from May 2008 to July 2008 and Senior Vice President, Engineering and Product Management from July 2006 to May 2008 and also Vice President of Engineering from April 2002 to July 2006. He joined Qualcomm in 1994 as an engineer and was a leading contributor to the Globalstar project before joining the QCT team in 1999. He played a central role in developing QCT’s roadmap and led the development and commercialization of the 3GPP family of air interface technologies. His technical and business leadership have also been critical to the development and implementation of multiple industry-leading innovations. He has been a Director of Qualcomm Incorporated since December 12, 2013 and General Electric Company since November 4, 2016. He serves on the Board of Directors at the Semiconductor Industry Association and serves as Co-Chairman of the Global Semiconductor Alliance Board of Directors to include their Executive Committee and CEO Council. A published IEEE author, Mr. Mollenkopf holds patents in areas such as power estimation and measurement, multi-standard transmitter system and wireless communication transceiver technology. Mr. Mollenkopf holds two Electrical Engineering degrees, including a BSEE from Virginia Tech and an MSEE from the University of Michigan at Ann Arbor.

    CEO Compensation
    • CEO's compensation has been consistent with company performance over the past year.
    • CEO's compensation appears reasonable.
    Management Team Tenure

    Average tenure of the QUALCOMM management team:

    Management tenure
    6.9 years
    • The average tenure for the QUALCOMM management team is over 5 years, this suggests they are a seasoned and experienced team.
    Management Team

    Paul Jacobs

    TITLE
    Executive Chairman
    COMPENSATION
    $9,173,340
    AGE
    54

    Steve Mollenkopf

    TITLE
    Chief Executive Officer and Director
    COMPENSATION
    $11,066,012
    AGE
    48

    Derek Aberle

    TITLE
    President
    COMPENSATION
    $10,544,826
    AGE
    47

    George Davis

    TITLE
    Chief Financial Officer
    COMPENSATION
    $4,494,150
    AGE
    59

    Brian Modoff

    TITLE
    Executive Vice President of Strategy and Mergers & Acquisitions
    COMPENSATION
    $7,654,321
    AGE
    58

    Franklin Antonio

    TITLE
    Co-Founder and Chief Scientist
    Board of Directors Tenure

    Average tenure of the QUALCOMM board of directors:

    Board tenure
    5.1 years
    • The tenure for the QUALCOMM board of directors is about average.
    Board of Directors

    Paul Jacobs

    TITLE
    Executive Chairman
    COMPENSATION
    $9,173,340
    AGE
    54

    Steve Mollenkopf

    TITLE
    Chief Executive Officer and Director
    COMPENSATION
    $11,066,012
    AGE
    48

    Barbara Alexander

    TITLE
    Independent Director
    COMPENSATION
    $425,693
    AGE
    68

    Sandy Randt

    TITLE
    Independent Director
    COMPENSATION
    $368,434
    AGE
    71

    Tom Horton

    TITLE
    Presiding Director
    COMPENSATION
    $441,034
    AGE
    56

    Francisco Ros

    TITLE
    Independent Director
    COMPENSATION
    $354,534
    AGE
    66
    Recent Insider Trading
    • More shares have been bought than sold by QUALCOMM insiders in the past 3 months.
    Who owns this company?
    X
    Management checks
    We assess QUALCOMM's management by checking for:
    1. Is the CEO's compensation unreasonable compared to market cap and profit (greater than 0.5% of the company's profit + 0.03% of market cap)? (1 check)
    2. Has the CEO's compensation increased more than 20% whilst the EPS is down more then 20%? (1 check)
    3. Is the average tenure of the management team less than 2 years? (1 check)
    4. Is the average tenure of the board of directors team less than 3 years? (1 check)
    5. QUALCOMM has a total score of 6/6, this is not included on the snowflake, see the detailed checks below.


    Note: We use the top 6 management executives and board members in our calculations.

    Note 2: Insider trading include any internal stakeholders and these transactions.

    Full details on the Management part of the Simply Wall St company analysis model.

    Company News

    Company Info

    Description

    QUALCOMM Incorporated develops, designs, manufactures, and markets digital communications products and services in China, South Korea, Taiwan, the United States, and internationally. The company operates through three segments: Qualcomm CDMA Technologies (QCT); Qualcomm Technology Licensing (QTL); and Qualcomm Strategic Initiatives (QSI). The QCT segment develops and supplies integrated circuits and system software based on code division multiple access (CDMA), orthogonal frequency division multiple access (OFDMA), and other technologies for use in voice and data communications, networking, application processing, multimedia, and global positioning system products. The QTL segment grants licenses or provides rights to use portions of its intellectual property portfolio, which include various patent rights useful in the manufacture and sale of certain wireless products comprising products implementing CDMA2000, WCDMA, CDMA TDD, and/or LTE standards, as well as their derivatives. The QSI segment invests in early-stage companies in various industries, including digital media, e-commerce, healthcare, and wearable devices for supporting the design and introduction of new products and services for voice and data communications. The company also develops and offers products for implementation of small cells; mobile health products and services; software products, and content and push-to-talk enablement services to wireless operators; and development, and other services and related products to the United States government agencies and their contractors. In addition, it licenses chipset technology and products for data centers. QUALCOMM Incorporated was founded in 1985 and is headquartered in San Diego, California.

    Details
    Name:QUALCOMM Incorporated
    Ticker:QCOM
    Exchange:NasdaqGS
    Founded:1985
    Market Cap:$78,556 million
    Website:http://www.qualcomm.com
    Listings
    Map

    5775 Morehouse Dr, San Diego, 92121, United States

    Number of employees
    Street

    Current staff
    Staff numbers
    30,500
    QUALCOMM employees.
    Industry
    Industry:Semiconductors
    Sector:Semiconductors and Semiconductor Equipment