Qualcomm Stock: A Super Simple Guide to What’s Happening

Why Is Everyone Talking About Qualcomm?

• Qualcomm (nickname: QCOM) is a company that makes chips—the tiny brains that help phones and other gadgets work.
• Lately, many people have been searching for Qualcomm’s stock on Zacks.com (a website that follows investments).
• This article shares easy facts that could affect Qualcomm’s stock price in the coming weeks or months.

How Has Qualcomm’s Stock Been Doing?

• Over the past month, if you owned a share of Qualcomm, its value went down 10.7% (you’d have about 10.7% less money than a month ago).
• During that same time, a big group of 500 large U.S. companies (the “S&P 500”) went up 4.3%.
• Other companies that make semiconductors (chip friends) went up 7.2%.
• So Qualcomm’s stock fell while many others rose. The big question: where will it go next?

What Really Matters for Long-Term Owners?

• News or rumors can make a stock jump for a day.
• But if you plan to buy and hold (keep the stock for a while), you should look at the company’s fundamentals—its basic health like profit and sales.
• Let’s look at those simple basics.

Earnings Estimate Revisions (Experts Guessing Future Profit)

What Zacks Looks At

Instead of worrying about rumors, Zacks focuses on how experts change their guesses about a company’s future profit (earnings).

Important: A stock’s fair price is like a piggy-bank value decided by all the money the company will earn in the future, counted in today’s dollars.

How a Higher Guess Can Push Price Up (Numbered Steps)

1. Experts who follow the stock (called analysts) guess how much profit the company will make.
2. If they raise their guess because business looks better, the “fair value” of the stock goes up.
3. If that fair value is higher than the current price tag, more people want to buy the stock.
4. More buying pushes the stock price higher.
5. Studies show that when these guesses change, the stock price often moves the same way soon after.

Qualcomm’s Profit Guesses

• Current quarter expected profit: $2.21 per share (a “share” is one slice of the company). That is 20.2% lower than the same quarter last year.
• Over the last 30 days, the average expert guess slipped by 0.6%.
• Full current year guess: $10.77 per share, which is 10.5% lower than last year. This guess changed only -0.1% in 30 days.
• Next year guess: $10.96 per share, which is 1.8% higher than this year’s expected number. This guess went up 1% in the past month.

Zacks Rank: A Simple Scorecard

• Zacks has a special tool called Zacks Rank that uses those guess changes to predict near-term price direction.
• It gives a grade from #1 (Strong Buy) to #5 (Strong Sell).
• Qualcomm received Zacks Rank #3 (Hold). That means it is expected to move about the same as the overall market soon.

The 12-Month Earnings Picture

• A chart in the original article shows how the average guess for Qualcomm’s profit over the next 12 months has changed.
• Caption: “12-month consensus EPS estimate for QCOM” (EPS = earnings per share, or profit per slice).
• (Imagine a wiggly line that goes up and down as experts update their thoughts.)

Revenue Growth Forecast (Is the Company Selling More?)

• Profit is important, but a company also needs to bring in money from sales (called revenue).
• Think of revenue like the total coins from a lemonade stand.

Qualcomm’s Sales Guesses

• Current quarter sales guess: $9.7 billion (that’s 9,700 million dollars). That’s 6.5% lower than last year.
• Current full-year sales guess: $42.62 billion, down 3.4% from last year.
• Next year sales guess: $43.55 billion, up 2.2% from the current year.

Last Reported Results and Surprise History

• In the most recent quarter we have data for:
  • Qualcomm made $10.6 billion in sales. That is 2.2% less than the same time last year.
  • Profit per share was $2.65, compared to $2.85 a year ago.
• Compared to expert guesses:
  • Sales guess was $10.62 billion, so actual sales were a tiny bit lower: surprise of -0.19% (almost exactly on target).
  • Profit surprise was +3.11% (they made a bit more profit than expected).
• Over the last four quarters:
  • They beat (did better than) profit guesses every single time.
  • They beat sales guesses only once.

Valuation: Is the Price Tag Fair?

• Before buying, we must check if the price makes sense.
• We compare numbers like:
  • Price-to-Earnings (P/E): how much you pay for $1 of profit.
  • Price-to-Sales (P/S): how much you pay for $1 of sales.
  • Price-to-Cash Flow (P/CF): how much for $1 of cash coming in.
• Zacks has a Value Style Score that grades stocks A (great bargain) to F (too pricey).
• Qualcomm gets a C, meaning its price is about average compared to its chip-making friends (trading at par).

Callout for Important Point: A “C” grade means Qualcomm is neither a steal nor too expensive relative to its peers.

Conclusion

• The facts above (and more on Zacks.com) can help you decide if you should pay attention to the Qualcomm buzz.
• But the Zacks Rank #3 says it will likely perform in line with the broader market in the near term (not shoot up or down sharply based on estimates).

Want the Latest Zacks Recommendations?

• Zacks offers a free report: “7 Best Stocks for the Next 30 Days” (original link).
• Free Qualcomm analysis report (link).
• This article originally published on Zacks Investment Research (homepage).

Summary

• Qualcomm stock dropped ~10.7% past month while market rose.
• Experts slightly lowered near-term profit guesses, but next year guess rose a bit.
• Sales are expected to dip slightly then rise.
• Last quarter: sales slightly missed, profit beat.
• Valuation is average (grade C).
• Zacks Rank #3 = Hold, suggests market-like performance near term.

FAQ

1. What is Qualcomm?
A company that makes semiconductors (chips for phones and tech), traded as QCOM on the stock market.

2. Why did the stock go down recently?
While we don’t know exactly, its price fell 10.7% in a month when similar companies rose; part of the reason may be that experts trimmed profit guesses a little.

3. What does Zacks Rank #3 mean?
It means “Hold” – the stock is expected to move similarly to the overall market soon.

4. Is Qualcomm’s stock cheap or expensive?
Its Zacks Value Score is C, meaning it’s priced about fairly compared to other similar companies.

5. Should I buy Qualcomm stock now?
This article doesn’t give personal advice, but based on estimates and rank, it may just track the market near term. Always do your own research or talk to a trusted adult.