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, good cash flow from operations and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

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Highlights from the ratings report include:
  • QCOM's revenue growth has slightly outpaced the industry average of 15.2%. Since the same quarter one year prior, revenues rose by 23.9%. 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 2.92, which clearly demonstrates the ability to cover short-term cash needs.
  • QUALCOMM INC has improved earnings per share by 26.2% 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 ($4.54 versus $3.06).
  • Net operating cash flow has increased to $2,216.00 million or 17.37% when compared to the same quarter last year. In addition, QUALCOMM INC has also modestly surpassed the industry average cash flow growth rate of 12.07%.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. 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. It operates in four segments: QCT, QTL, QWI, and QSI. Qualcomm has a market cap of $113.4 billion and is part of the technology sector and telecommunications industry. The company has a P/E ratio of 18.00, above the S&P 500 P/E ratio of 18.00. Shares are up 6.1% year to date as of the close of trading on Friday.

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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