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QUALCOMM

Nasdaq:QCOM
Snowflake Description

Established dividend payer with adequate balance sheet.

The Snowflake is generated from 30 checks in 5 different areas, read more below.
QCOM
Nasdaq
$95B
Market Cap
  1. Home
  2. US
  3. Semiconductors
2017/12/16
Company description

QUALCOMM Incorporated designs, develops, manufactures, and markets digital communication products worldwide. More info.


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3 Month History
QCOM
Industry
5yr Volatility vs Market
Competitors

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 analysis.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 Avocados) 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?
  • QUALCOMM is overvalued based on earnings compared to the Global Semiconductors and Semiconductor Equipment industry average.
  • QUALCOMM is overvalued based on earnings compared to the US market.
Price based on expected Growth
Does QUALCOMM's expected growth come at a high price?
  • QUALCOMM is poor value based on expected growth next year.
Price based on value of assets
What value do investors place on QUALCOMM's assets?
  • QUALCOMM is overvalued based on assets compared to the Global Semiconductors and Semiconductor Equipment 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 Semiconductor 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 Semiconductor industry average (and greater than 0)? (1 check)
  5. QUALCOMM has a total score of 0/6, 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 (50.02%).

    Full details on the Value part of the Simply Wall St company analysis model.
X
Discounted cash flow (2 Stage 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:
$18,526

Terminal Value

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

Terminal Value = $5,522 × (1 + 2.47%) ÷ (10.56% – 2.47%)

Terminal value based on the Perpetuity Method where growth (g) = 2.47%:
$69,967

Present value of terminal value:
$42,360

Equity Value

Equity Value (Total value) = Present value of next 5 years cash flows + terminal value
$60,886 = $18,526 + $42,360

Value = Total value / Shares Outstanding ($60,886 / 1,474)

Discount to Share Price

Value per share:
$41.3

Current discount (share price of $64.76): -56.8%



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 = 10.56% = 2.47% + (1.074 * 7.53%)



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). Note the market value of equity is used not the book value ($95,378,452,143).

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

1.074 = 0.935 (1 + (1- 35%) (22.95%))

Levered Beta used in calculation = 1.074



Assumptions
  1. The risk free rate of 2.47% is from the 10 year government bond rate in USD.
  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 (7.53%) (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 19 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!
Annual Growth Rate
23.3%
Expected annual growth in earnings.
Earnings growth vs Low Risk Savings
Is QUALCOMM expected to grow at an attractive rate?
  • QUALCOMM's earnings growth is expected to exceed the low risk savings rate of 4.5%.
Growth vs Market Checks
  • QUALCOMM's earnings growth is expected to exceed the US market average.
  • QUALCOMM's revenue growth is positive but not above the US market average.
Annual Growth Rates Comparison
Analysts growth expectations
Super high growth metrics
High Growth Checks
  • QUALCOMM's earnings are expected to grow significantly at over 20% yearly.
  • QUALCOMM's revenue is expected to grow by 2.9% yearly, however this is not considered high growth (20% yearly).
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 occurred. We also show the highest and lowest estimates looking forward to see if there is a wide range.
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
  • Performance (ROE) is expected to be above the current Global Semiconductors and Semiconductor Equipment 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 annual earnings growth rate expected to beat the low risk savings rate, plus a premium to keep pace with inflation?
  2. Is the annual earnings growth rate expected to beat the average growth rate in earnings of the XX market? (1 check)
  3. Is the annual revenue growth rate expected to beat the average growth rate in revenue of the XX market? (1 check)
  4. Is the annual earnings growth rate expected to be above 20%? (1 check)
  5. Is the annual revenue growth rate expected to be above 20%? (1 check)
  6. 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 3/6, see the detailed checks below.

Note 1: We use GAAP Net Income Excluding Exceptional Items for our Earnings 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 (Semiconductor).
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 year on year growth rate is negative over the past 5 years and the most recent earnings are below average.
  • QUALCOMM's 1 year earnings growth is negative, it can't be compared to the 5 year average.
  • QUALCOMM's 1 year earnings growth is negative, it can't be compared to the Global Semiconductors and Semiconductor Equipment industry average.
Earnings and Revenue 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 < 20%) last year.
  • QUALCOMM performed above the Global Semiconductors and Semiconductor Equipment industry average based on Return on Assets (ROA) last year.
  • Performance based on Return on Capital Employed (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 increased in past 5 years? (1 check)
  2. Has the earnings growth in the last year exceeded that of the Semiconductor industry? (1 check)
  3. Is the recent earnings growth over the last year 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 1/6, see the detailed checks below.

Note: We use GAAP Net Income excluding extraordinary items 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 total short term assets, assets are 2x debt.
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.
  • QUALCOMM's level of debt (71.2% of total debt) compared to net worth is high (greater than 40%).
  • The level of debt compared to net worth has increased over the past 5 years (0.4% vs 71.2% today).
  • Total debt is well covered by annual operating cash flow (21.4%, greater than 20% of total debt).
  • QUALCOMM earns more interest than it pays.
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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 company pays interest at all)? (1 check)
  7. QUALCOMM has a total score of 4/6, 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
3.52%
Current annual income from QUALCOMM dividends. Estimated to be 3.72% next year.
If you bought $2,000 of QUALCOMM shares you are expected to receive $70 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 markets top dividend payers (3.18%).
Annualized Historical and Future Dividends
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 not well covered by net profit (0.8x coverage).
Future Payout to shareholders
  • Dividends after 3 years are expected to be covered by net profit (1.7x coverage).
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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 5/6, 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
AGE 48
TENURE AS CEO 3.8 years
CEO Bio

Mr. Steven M. Mollenkopf, also known as Steve, has been the Chief Executive Officer of QUALCOMM Incorporated since March 4, 2014. 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
  • Steve's compensation has been consistent with company performance over the past year.
  • Steve's compensation appears reasonable.
Management Team Tenure

Average tenure and age of the QUALCOMM management team in years:

7.5
Average Tenure
54.5
Average Age
  • 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
$9M
AGE
54

Steve Mollenkopf

TITLE
CEO & Director
COMPENSATION
$11M
AGE
48
TENURE
3.8 yrs

Derek Aberle

TITLE
President
COMPENSATION
$11M
AGE
47
TENURE
3.8 yrs

George Davis

TITLE
CFO, Principal Finance & Accounting Officer and Executive VP
COMPENSATION
$4M
AGE
59
TENURE
4.8 yrs

Brian Modoff

TITLE
Executive Vice President of Strategy and Mergers & Acquisitions
COMPENSATION
$8M
AGE
58
TENURE
2.2 yrs

Franklin Antonio

TITLE
Co-Founder and Chief Scientist
TENURE
32.9 yrs

Jim Thompson

TITLE
Chief Technology Officer
AGE
53
TENURE
0.8 yrs

Mary Gendron

TITLE
Chief Information Officer and Senior Vice President
AGE
51
TENURE
1.8 yrs

John Sinnott

TITLE
Vice President of Investor Relations

Don Rosenberg

TITLE
Executive VP
COMPENSATION
$6M
AGE
66
TENURE
10.2 yrs
Board of Directors Tenure

Average tenure and age of the QUALCOMM board of directors in years:

5.1
Average Tenure
59.1
Average Age
  • The tenure for the QUALCOMM board of directors is about average.
Board of Directors

Steve Mollenkopf

TITLE
CEO & Director
COMPENSATION
$11M
AGE
48
TENURE
4 yrs

Barbara Alexander

TITLE
Independent Director
COMPENSATION
$426K
AGE
68
TENURE
11.4 yrs

Paul Jacobs

TITLE
Executive Chairman
COMPENSATION
$9M
AGE
54
TENURE
8.8 yrs

Sandy Randt

TITLE
Independent Director
COMPENSATION
$368K
AGE
71
TENURE
4.2 yrs

Tom Horton

TITLE
Presiding Director
COMPENSATION
$441K
AGE
56

Francisco Ros

TITLE
Independent Director
COMPENSATION
$355K
AGE
66
TENURE
7 yrs

Harish Manwani

TITLE
Director
COMPENSATION
$329K
AGE
63
TENURE
3.6 yrs

Mark McLaughlin

TITLE
Independent Director
COMPENSATION
$390K
AGE
51
TENURE
2.4 yrs

Tony Vinciquerra

TITLE
Independent Director
COMPENSATION
$358K
AGE
62
TENURE
2.4 yrs

Jeff Henderson

TITLE
Independent Director
COMPENSATION
$344K
AGE
52
TENURE
1.9 yrs
Recent Insider Trading
  • No 3 month insider trading information.
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 0/6, 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

Map
Description

QUALCOMM Incorporated designs, develops, manufactures, and markets digital communication products worldwide. It 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, and other technologies for use in wireless 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 wireless products comprising products implementing CDMA2000, wideband CDMA, CDMA time division duplex, and/or long term evolution standards and their derivatives. The QSI segment invests in early-stage companies in various industries, including automotive, Internet of things, mobile, data center, and healthcare for supporting the design and introduction of new products and services for voice and data communications, and new industry segments. The company also provides products and services for mobile health; products designed for the implementation of small cells; development, and other services and related products to the United States government agencies and their contractors; and software products, and content and push-to-talk enablement services to wireless operators. In addition, it licenses chipset technology, and products and services for use in 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: $95,378,452,143
Shares outstanding: 1,474,164,639
Website: http://www.qualcomm.com
Address: QUALCOMM Incorporated
5775 Morehouse Drive,
San Diego,
California, 92121,
United States
Listings
Exchange Symbol Ticker Symbol Security Exchange Country Currency Listed on
NasdaqGS QCOM Common Stock Nasdaq Global Select US USD 13. Dec 1991
DB QCI Common Stock Deutsche Boerse AG DE EUR 13. Dec 1991
XTRA QCI Common Stock XETRA Trading Platform DE EUR 13. Dec 1991
SWX QCOM Common Stock SIX Swiss Exchange CH CHF 13. Dec 1991
SWX QCOM Common Stock SIX Swiss Exchange CH CHF 13. Dec 1991
WBAG QCOM Common Stock Wiener Boerse AG AT EUR 13. Dec 1991
SNSE QCOM Common Stock Santiago Stock Exchange CL USD 13. Dec 1991
BMV QCOM * Common Stock Bolsa Mexicana de Valores MX MXN 13. Dec 1991
BOVESPA QCOM34 BDR EACH REPR 1 COM SHS Bolsa de Valores de Sao Paulo BR BRL 23. Aug 2012
BASE QCOM CEDEAR EACH 11 REP 1 ORD USD0.0001 Buenos Aires Stock Exchange AR ARS 13. Sep 2000
Number of employees
Current staff
Staff numbers
33,800
QUALCOMM employees.
Industry
Industry: Semiconductors
Sector: Semiconductors