Shares of Qualcomm Inc (NASDAQ: QCOM ) gained 3.25% on Tuesday, closing at $110.28 per share, despite a 3-month loss of -8.13%. This surge was largely driven by the company's multi-year agreement with Apple Inc (NASDAQ: AAPL ). to supply Snapdragon 5G Modem-RF systems for upcoming iPhone models, which is expected to remain in effect until 2026.
Despite this positive news, Qualcomm's financial strength calls for a cautious review. The company's cash-to-debt ratio of 0.56 is worse than 76.85% of companies in the Semiconductors industry. However, Qualcomm has demonstrated high profitability and consistent growth, being profitable in 9 out of the past 10 years with an operating margin of 28.77%, ranking better than 92.54% of companies in the industry.
Additionally, Qualcomm's Return on Invested Capital (ROIC) over the past 12 months was 27.25, while its Weighted Average Cost of Capital (WACC) came in at 10.34, indicating that the company is creating value for shareholders.
The company's stock appears to be modestly undervalued compared to its GF Value of $152.29. The GF Value is a measure that provides an estimation of a stock's fair value based on historical trading multiples, past performance and growth, and future business performance estimates.
Looking ahead, Qualcomm is expected to post quarterly earnings of $1.91 per share in its upcoming report, representing a year-over-year change of -39%. Revenues are projected to be $8.51 billion, down 25.3% from the year-ago quarter.
Despite these challenges, Qualcomm's growth rate ranks better than 53.26% of companies in the Semiconductors industry, suggesting potential for promising future returns.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.
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