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How Will Qualcomm (QCOM) Stock Respond to Its Anticipated Introduction of New Wi-Fi Products?

NEW YORK (TheStreet) -- Shares of QUALCOMM, Inc.  (QCOM) are slightly higher in pre-market trade after it was reported that the maker of chips for mobile phones bought Israel-based Wilocity Ltd. in a move to speed up introduction of new Wi-Fi products, Bloomberg reports.

Wilocity's fast gigabit wireless-data capabilities will be included in sample products being shipped to customers, Qualcomm said. Terms of the deal were not disclosed.

Must Read: Warren Buffett's 25 Favorite Growth Stocks

Qualcom is now in direct competition with Wi-Fi industry leader Broadcom Corp. (BRCM).

By accelerating the rollout of its new technology, Qualcomm is trying to cut into Broadcom's lead in chips that power home wireless-Internet routers and other consumer electronics, Bloomberg said.

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, solid stock price performance and growth in earnings per share. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • QCOM's revenue growth has slightly outpaced the industry average of 2.6%. Since the same quarter one year prior, revenues slightly increased by 4.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving 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 3.19, 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.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 28.56% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, QCOM should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • QUALCOMM INC has improved earnings per share by 7.5% 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 $3.91 versus $3.06 in the prior year. This year, the market expects an improvement in earnings ($5.18 versus $3.91).
  • You can view the full analysis from the report here: QCOM Ratings Report

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