Why QUALCOMM (QCOM) Stock Is Down In After-Market Trading

NEW YORK (TheStreet) -- Shares of QUALCOMM Inc.  (QCOM) are down -3.94% to $77.53 after reporting second quarter fiscal 2014 results.

The chipmaker missed expectations as it wrestles with a smartphone market that is losing steam and shifting to China, Reuters reports.

Second quarter revenue was $6.37 billion, up 4% from the year-ago period.

Analysts on average had expected second quarter revenue of $6.479 billion, according to Thomson Reuters I/B/E/S.

Net income was $1.96 billion, up 5%. GAAP diluted earnings per share were $1.14.

Its non-GAAP earnings per share were $1.31, above its previous forecast of between $1.15 and $1.25.

Analysts on average expected $1.22, Reuters said.

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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

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