The chipmaker posted earnings of $1.31 a share for the second quarter, beating analysts' estimates of $1.22 a share by 9 cents. Revenue grew 4% from the year-ago quarter to $6.37 billion, but fell short of the $6.48 billion consensus among analysts surveyed by Thomson Reuters.
Qualcomm shipped 188 million MS chips in the quarter, an increase of 9% from the year-ago quarter and in-line with the company's guidance of between 180 million and 195 million. Devices sales grew 9% to a total of about $66.5 billion in the quarter.
Looking to the fiscal third quarter Qualcomm expects revenue of between $6.2 billion and $6.8 billion, and earnings of between $1.15 and $1.25 a share, while analysts expect $6.59 billion in revenue and earnings of $1.25 a share. The company expects to ship between 198 million and 213 million MSM chips in the quarter.
For the full year Qualcomm expects revenue of $26 billion to $27.5 billion and $5.05 to $5.25 a share in earnings. Analysts expect revenue of $26.8 billion in revenue and earnings of $5.13 a share for the year.
TheStreet Ratings team rates QUALCOMM INC as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:
"We rate QUALCOMM INC (QCOM) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- QCOM's revenue growth has slightly outpaced the industry average of 1.1%. Since the same quarter one year prior, revenues rose by 10.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in 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 3.50, which clearly demonstrates the ability to cover short-term cash needs.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Communications Equipment industry and the overall market, QUALCOMM INC's return on equity exceeds that of both the industry average and the S&P 500.
- Net operating cash flow has increased to $2,781.00 million or 40.81% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 20.01%.
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- You can view the full analysis from the report here: QCOM Ratings Report