Qualcomm (QCOM) Dividend Stock Analysis
The Qualcomm dividend has been paid continuously since 2003 and increased for 15 consecutive years. QCOM is included in the Dividend Contenders List.
Dividend Yield: 3.6%
Current Dividend: $2.28
Cash Flow From Operations (CFO) Per Share (ttm): $3.28
Free Cash Flow Per Share (ttm): $2.75
Market Capitalization: $94 B
Enterprise Value: $79 B
Dividend Analyzer Checklist
(updated February 2018)
Valuation Score (9/34 points)
Free Cash Flow Yield (ttm): 4.2% (9/17 points)
EV to EBIT (ttm): 32.0
EV to EBITDA (ttm): 20.3 (0/17 points)
Price to Sales Ratio (ttm): 4.4
Price to Book Value (ttm): 4.1
Price to Earnings Ratio (P/E) (ttm): n/a
PE 10: 25
Profitability Score (8/33 points)
Operating Earnings Yield (ttm): 1.9% (2/15 points)
Net Income (ttm): $-4169 M
Gross Profit (ttm): $12348 M
Total Assets: $64351 M
Gross Profitability Ratio = GP / Total Assets: 19% (6/18 points)
Cash Return On Invested Capital (CROIC)(tttm): 9%
Return on Invested Capital (ROIC): -9%
Dividend Safety Score (19/33 points)
Dividend Payout Ratio (ttm): -79%
Cash Dividend Payout Ratio (ttm): 81% (4/12 points)
Net Financial Debt: $-12557 M
Total Assets: $64351 M
Net Financial Debt / Total Assets: -20% (12/12 points)
Net Financial Debt to EBITDA (ttm): 431%
Piotroski Score (1-9) (TTM): (3/9 points)
TOTAL SCORE – (36/100) (50 is an average score)
Earnings Report: 1/31/18
Next Earnings Report: 4/19/18
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Rankings & Recommendations
(updated February 2018)
Qualcomm (QCOM) is ranked #345 overall (out of 432) and #26 (out of 28) in the Technology Sector by the Dividend Analyzer. QCOM is facing too much uncertainty to have any margin of safety. A hostile takeover bid from Broadcom (AVGO) has Qualcomm trading about 30% higher than before the offer; making the risk of holding QCOM at this price an unacceptable gamble.
Type of Investor / Recommendation
Large Diversified Dividend Portfolios / AVOID
Looking For Exposure to Technology Sector/ AVOID
Deep Value Investors / AVOID
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Industry: Communications Equipment
Qualcomm (QCOM) is a global technology company concentrated in digital communications products. The company develops Code Division Multiple Access (CDMA); technology which allows many users to share bandwidth.
QCOM operates in three divisions:
Qualcomm CDMA Technologies (QCT)
QCT accounts for approximately two-thirds of Qualcomm revenues. This division designs and manufactures integrated circuits and system software for use in mobile phones, networking, multimedia, global positioning systems, et.al.
Qualcomm Technology Licensing (QTL)
QTL accounts for approximately one-third of Qualcomm revenues but a majority of its profits. This division takes Qualcomm’s intellectual property and receives fees and royalties by granting licenses for other entities to use its technology.
Qualcomm Strategic Initiative (QSI)
QSI is a small but growing division which invests in early stage companies or new technologies in a wide variety of industries.
Qualcomm’s competitive advantage is its strategic assets, namely patents on its intellectual property. The company receives royalty income on most 3G and 4G mobile phones sold. This revenue should grow for many years as underdeveloped countries produce a middle class of customers who are eager to buy mobile phones.
High customer concentration (i.e Apple) could deal major blows to future growth if Qualcomm were to lose those accounts.
Qualcomm is battling regulatory challenges to their licensing agreements in various countries. Major changes in their approach to receiving fees and royalties could be a major disruptor.
The next frontier of mobile technology is being led by Qualcomm. The fact the company is the market leader and has strong relationships with every important smartphone manufacturer gives the company important advantages.
Regulatory uncertainty pertaining to licensing is the greatest threat. Since the majority of Qualcomm’s profits are derived from licensing, a major change in the manner fees and royalties are calculated could produce large declines in profits. One of the risks of being a global company is that you have to face these regulatory challenges in a multitude of jurisdictions.