Sunday, March 15, 2015

Analysis of Qualcomm 2015


Qualcomm, an American processor/chip producer

Company: Qualcomm

ISIN US7475251036 | WKN 883121

Business: An American semiconductor company. Their main activity is is five field of which the first one is the absolutely biggest one: Mobile (the classical smartphones, tablets, notebooks etc.), Automotive (for instance Maserati & Cadillac but several million cars contain Qualcomm technology), Education (wireless educational project, many developing countries have a better mobile infrastructure than anything else), Health Care (platform to monitor and improve health) and finally Networking (homes, enterprises, machine to machine etc.).

Active: World wide with their product and with offices in 34 countries.

P/E: 15.6

Here you can find the previous analysis of Qualcomm

contrarian values of P/E, P/B, ROE as well as dividend for Qualcomm

The P/E is a little high for me with 15.6 and so is the P/B with 3.2 which gives a clear no go from Graham. The earnings to sales are excellent with over 40% and the ROE is also excellent with 20.3%. The book to debt ratio is great with 4.2.
in the last five years they have had an insane yearly revenue growth of over 19%! This then gives us a motivated P/E (I am a bit careful now...) 35 to 40 which means that Qualcomm is undervalued by the market based on their growth rate.
They spend almost 70% of their earnings in research and that value I find to be a bit too high.
They pay a dividend that from my point of view is tiny but for american technology companies it is not bad with 2.1% which represents 33% of their earnings so there is room to keep growing the dividends with increased or even remained earnings.

Conclusion: Graham as often with growth companies says directly no and I am very optimistic towards Qualcomm. They have made a massive revenue and earnings push in the last five years and we see excellent E/S, ROE and a fully acceptable P/E and ok dividend. It is definitely an investment that I will consider in the future and they made a big jump up on the Stocks of Interest list.

If this analysis is outdated then you can request a new one.

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