Monday 15 April 2013

Analysis of Qualcomm

An American hardware producer for smartphones etc.

When it comes to companies that I do not own myself the story about them will be almost none existing however maybe someone else will find the excel sheet of interest and maybe decide to buy the stock. Qualcomm was analysed for the purpose of comparing it against Intel.

Company: Qualcomm
Business: They are mainly working with smartphones but keep all doors open. Making chips/processors as well as working with the LTE technology. They are also involved with software. My smartphone contains a snapdragon processor which is a product from Qualcomm. They are working a bit like an investor and are hunting small companies with great technology that they then help to push forward and bring out on the market.

Active: They are interacting with the high tech companies world wide.

P/E: 18.7

The share price is from closing day 11/4-13

This company has a high P/E with almost 19 and the P/B is a bit too high for qualifying for an investment according to the Graham formula. I must say though that they have an excellent E/S of 32% and for the last five years they have had a good solid growth of over 11%. This gives from Lynch and Graham a motivated P/E of 32. So with the current P/E of 19 the stock is cheap and it would be motivated to buy it. they spend a healthy amount on R&D with 65% of earnings but the dividend is low with only 1.4% which compares to 26% of their earnings. There is still some room to improve in my opinion.

They have rock solid earnings and a profit of 6.1 billion in 2012 is excellent! They also have a huge book value to debt. People are complaining about Apple but Qualcomm has almost double the book/debt compared to Apple so they have a huge cash deposit to live from when times get tough.

Conclusion: Qualcomm looks like an excellent company. I my opinion the company is worth being a shareholder in due to their nice healthy growth of over 11% per year and their rock solid earnings. For me one of those tech companies was enough and I preferred Intel to Qualcomm but number wise either of them is a clear go!

No comments: