What To Buy: Qualcomm Inc.'s Buy Recommendation Reiterated

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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, notable return on equity, impressive record of earnings per share growth and good cash flow from operations. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

Highlights from the ratings report include:
  • QCOM's revenue growth has slightly outpaced the industry average of 29.0%. Since the same quarter one year prior, revenues rose by 34.9%. 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 2.67, 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.
  • QUALCOMM INC has improved earnings per share by 30.4% 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 significantly increased by 125.27% to $2,077.00 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 82.01%.

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 $119.2 billion and is part of the technology sector and telecommunications industry. Shares are up 12.3% 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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