NASDAQ:QCOM, an undervalued stock with good fundamentals.

Our stock screening tool has pinpointed QUALCOMM INC (NASDAQ:QCOM) as an undervalued stock option. NASDAQ:QCOM retains a strong financial foundation and an attractive price tag. Let's delve into the specifics below.

Valuation Analysis for NASDAQ:QCOM

ChartMill employs its own Valuation Rating system for all stocks. This score, ranging from 0 to 10, is determined by evaluating different valuation factors, including price to earnings and free cash flow, both in absolute terms and relative to the market and industry. NASDAQ:QCOM has earned a 7 for valuation:

• QCOM's Price/Earnings ratio is rather cheap when compared to the industry. QCOM is cheaper than 85.32% of the companies in the same industry.
• QCOM is valuated rather cheaply when we compare the Price/Earnings ratio to 29.34, which is the current average of the S&P500 Index.
• 81.65% of the companies in the same industry are more expensive than QCOM, based on the Price/Forward Earnings ratio.
• The average S&P500 Price/Forward Earnings ratio is at 20.80. QCOM is valued slightly cheaper when compared to this.
• 77.98% of the companies in the same industry are more expensive than QCOM, based on the Enterprise Value to EBITDA ratio.
• QCOM's Price/Free Cash Flow ratio is rather cheap when compared to the industry. QCOM is cheaper than 90.83% of the companies in the same industry.
• QCOM's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
• The excellent profitability rating of QCOM may justify a higher PE ratio.
• QCOM's earnings are expected to grow with 15.01% in the coming years. This may justify a more expensive valuation.

Evaluating Profitability: NASDAQ:QCOM

Discover ChartMill's exclusive Profitability Rating, a proprietary metric that assesses stocks on a scale of 0 to 10. It takes into consideration various profitability ratios and margins, both in absolute terms and relative to industry peers. Notably, NASDAQ:QCOM has achieved a 9:

• QCOM has a better Return On Assets (16.52%) than 88.99% of its industry peers.
• QCOM's Return On Equity of 35.31% is amongst the best of the industry. QCOM outperforms 95.41% of its industry peers.
• QCOM has a Return On Invested Capital of 17.50%. This is amongst the best in the industry. QCOM outperforms 92.66% of its industry peers.
• QCOM had an Average Return On Invested Capital over the past 3 years of 24.51%. This is significantly above the industry average of 10.70%.
• The 3 year average ROIC (24.51%) for QCOM is well above the current ROIC(17.50%). The reason for the recent decline needs to be investigated.
• With an excellent Profit Margin value of 23.33%, QCOM belongs to the best of the industry, outperforming 81.65% of the companies in the same industry.
• With an excellent Operating Margin value of 25.50%, QCOM belongs to the best of the industry, outperforming 82.57% of the companies in the same industry.
• QCOM's Operating Margin has improved in the last couple of years.
• QCOM has a better Gross Margin (55.90%) than 76.15% of its industry peers.

What does the Health looks like for NASDAQ:QCOM

To gauge a stock's financial health, ChartMill utilizes a Health Rating on a scale of 0 to 10. This comprehensive evaluation encompasses liquidity and solvency, both in absolute terms and in comparison to industry peers. NASDAQ:QCOM has earned a 7 out of 10:

• An Altman-Z score of 6.25 indicates that QCOM is not in any danger for bankruptcy at the moment.
• Looking at the Altman-Z score, with a value of 6.25, QCOM is in the better half of the industry, outperforming 69.72% of the companies in the same industry.
• The Debt to FCF ratio of QCOM is 1.16, which is an excellent value as it means it would take QCOM, only 1.16 years of fcf income to pay off all of its debts.
• With a decent Debt to FCF ratio value of 1.16, QCOM is doing good in the industry, outperforming 74.31% of the companies in the same industry.
• Although QCOM does not score too well on debt/equity it has very limited outstanding debt, which is well covered by the FCF. We will not put too much weight on the debt/equity number as it may be because of low equity, which could be a consequence of a share buyback program for instance. This needs to be investigated.
• QCOM has a Current Ratio of 2.39. This indicates that QCOM is financially healthy and has no problem in meeting its short term obligations.

Deciphering NASDAQ:QCOM's Growth Rating

ChartMill assigns a proprietary Growth Rating to each stock. The score is computed by evaluating various growth aspects, like EPS and revenue growth. We take into account the history as well as the estimated future numbers. NASDAQ:QCOM was assigned a score of 5 for growth:

• QCOM shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 19.65% yearly.
• QCOM shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 9.64% yearly.
• QCOM is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 10.30% yearly.

More Decent Value stocks can be found in our Decent Value screener.

Our latest full fundamental report of QCOM contains the most current fundamental analsysis.

Keep in mind

This article should in no way be interpreted as advice. The article is based on the observed metrics at the time of writing, but you should always make your own analysis and trade or invest at your own responsibility.