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Qualcomm Inc. Stock Buy Recommendation Reiterated (QCOM)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK ( TheStreet) -- Qualcomm (Nasdaq: QCOM) has been reiterated by TheStreet Ratings as a buy with a ratings score of A+ . The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

  • EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 14.0%. Since the same quarter one year prior, revenues rose by 28.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • QCOM's debt-to-equity ratio is very low at 0.00 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 2.98, which clearly demonstrates the ability to cover short-term cash needs.
  • QUALCOMM INC has improved earnings per share by 34.6% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, QUALCOMM INC increased its bottom line by earning $3.06 versus $2.71 in the prior year. This year, the market expects an improvement in earnings ($4.50 versus $3.06).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Communications Equipment industry average. The net income increased by 36.0% when compared to the same quarter one year prior, rising from $1,401.00 million to $1,906.00 million.
  • The gross profit margin for QUALCOMM INC is rather high; currently it is at 67.90%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 31.67% is above that of the industry average.

QUALCOMM Incorporated designs, develops, manufactures, and markets digital telecommunications products and services. It operates in four segments: QCT, QTL, QWI, and QSI. Qualcomm has a market cap of $116.78 billion and is part of the technology sector and telecommunications industry. The company has a P/E ratio of 20.4, above the S&P 500 P/E ratio of 17.7. Shares are up 9.9% year to date as of the close of trading on Wednesday.

You can view the full Qualcomm Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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