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 (
) 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, growth in earnings per share, compelling growth in net income and increase in stock price during the past year. We feel these strengths outweigh the fact that the company shows weak operating cash flow.
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Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 14.2%. Since the same quarter one year prior, revenues rose by 27.7%. 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 0.03 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 2.66, which clearly demonstrates the ability to cover short-term cash needs.
- QUALCOMM INC has improved earnings per share by 19.0% 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 $2.71 versus $2.13 in the prior year. This year, the market expects an improvement in earnings ($3.64 versus $2.71).
- The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Communications Equipment industry average. The net income increased by 16.6% when compared to the same quarter one year prior, going from $1,035.00 million to $1,207.00 million.
- The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. 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.
QUALCOMM Incorporated designs, develops, manufactures, and markets digital telecommunications products and services. The company has a P/E ratio of 20.4, above the average telecommunications industry P/E ratio of 17.8 and above the S&P 500 P/E ratio of 17.7. Qualcomm has a market cap of $102.82 billion and is part of the technology sector and telecommunications industry. Shares are up 11.5% year to date as of the close of trading on Wednesday.
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--Written by a member of TheStreet Ratings Staff.
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