NASDAQ:QCOM is a prime example of a stock that offers more than what meets the eye in terms of fundamentals.

QUALCOMM INC (NASDAQ:QCOM) is a hidden gem identified by our stock screening tool, featuring undervaluation and robust fundamentals. NASDAQ:QCOM showcases decent financial health and profitability, coupled with an attractive price. Let's dig deeper into the analysis.

A Closer Look at Valuation for NASDAQ:QCOM

ChartMill assigns a Valuation Rating to every stock. This score ranges from 0 to 10 and evaluates the different valuation aspects and compares the price to earnings and cash flows, while taking into account profitability and growth. NASDAQ:QCOM scores a 7 out of 10:

• Based on the Price/Earnings ratio, QCOM is valued cheaply inside the industry as 86.11% of the companies are valued more expensively.
• QCOM's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 29.10.
• Based on the Price/Forward Earnings ratio, QCOM is valued cheaper than 86.11% of the companies in the same industry.
• QCOM is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 23.79, which is the current average of the S&P500 Index.
• Based on the Enterprise Value to EBITDA ratio, QCOM is valued a bit cheaper than 76.85% of the companies in the same industry.
• Compared to the rest of the industry, the Price/Free Cash Flow ratio of QCOM indicates a rather cheap valuation: QCOM is cheaper than 92.59% of the companies listed in the same industry.
• The excellent profitability rating of QCOM may justify a higher PE ratio.

Understanding NASDAQ:QCOM's Profitability

ChartMill's Profitability Rating offers a unique perspective on stock analysis, providing scores from 0 to 10. These ratings consider a wide range of profitability metrics and margins, both in comparison to industry peers and on their own merits. For NASDAQ:QCOM, the assigned 9 is a significant indicator of profitability:

• Looking at the Return On Assets, with a value of 18.39%, QCOM belongs to the top of the industry, outperforming 91.67% of the companies in the same industry.
• QCOM has a Return On Equity of 38.60%. This is amongst the best in the industry. QCOM outperforms 93.52% of its industry peers.
• Looking at the Return On Invested Capital, with a value of 18.14%, QCOM belongs to the top of the industry, outperforming 92.59% of the companies in the same industry.
• The Average Return On Invested Capital over the past 3 years for QCOM is significantly above the industry average of 11.09%.
• QCOM's Profit Margin of 26.03% is amongst the best of the industry. QCOM outperforms 87.04% of its industry peers.
• QCOM's Profit Margin has improved in the last couple of years.
• QCOM has a better Operating Margin (26.32%) than 85.19% of its industry peers.
• QCOM's Operating Margin has improved in the last couple of years.
• With a decent Gross Margin value of 56.22%, QCOM is doing good in the industry, outperforming 77.78% of the companies in the same industry.

Exploring NASDAQ:QCOM's Health

ChartMill assigns a proprietary Health Rating to each stock. The score is computed by evaluating various liquidity and solvency ratios and ranges from 0 to 10. NASDAQ:QCOM was assigned a score of 7 for health:

• QCOM has an Altman-Z score of 6.00. This indicates that QCOM is financially healthy and has little risk of bankruptcy at the moment.
• QCOM has a better Altman-Z score (6.00) than 66.67% of its industry peers.
• QCOM has a debt to FCF ratio of 1.31. This is a very positive value and a sign of high solvency as it would only need 1.31 years to pay back of all of its debts.
• QCOM has a Debt to FCF ratio of 1.31. This is in the better half of the industry: QCOM outperforms 76.85% of its industry peers.
• 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 2.40. This indicates that QCOM is financially healthy and has no problem in meeting its short term obligations.

Understanding NASDAQ:QCOM's Growth

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:

• The Earnings Per Share has grown by an impressive 21.40% over the past year.
• QCOM shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 23.53% yearly.
• QCOM shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 8.77%.
• Measured over the past years, QCOM shows a quite strong growth in Revenue. The Revenue has been growing by 14.76% on average per year.

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 is not investing advice! The article highlights some of the observations at the time of writing, but you should always make your own analysis and invest based on your own insights.