Today, Qualcomm (NASDAQ:QCOM) is set to announce its Q4 earnings, projecting an EPS of $1.91 and revenues of $8.52 billion. The firm's expectations may be surpassed due to a spike in Android smartphone demand, the deployment of Snapdragon 8 Gen 2 processors, and robust iPhone 15 sales, as reported on Tuesday. Despite these possible gains, Qualcomm faces potential market share loss to Samsung (KS:005930) and Huawei by 2024.
KeyBanc Capital predicts a "beat and raise" situation driven by Android rush orders. At the Snapdragon Summit 2023, Qualcomm presented new AI chips, aiming to diversify its offerings and rival Nvidia (NASDAQ:NVDA) in generative AI. Amid persistent industry challenges, Qualcomm terminated 1,258 California-based jobs in October. Over the past quarter, Qualcomm's EPS forecasts experienced more downward than upward revisions, with revenue estimates also mostly being downgraded. Wall Street and Seeking Alpha analysts predominantly recommend a Buy rating for Qualcomm.
Qualcomm's shares have decreased by 1% YTD and are underperforming broader indexes. However, its attractive valuation may be boosted if it surpasses its projected Q4 earnings of $1.92 per share and sales of $8.55 billion as indicated by the Zacks ESP.
In contrast, Apple (NASDAQ:AAPL) has seen an impressive stock performance with a surge of 31% YTD. It is expected to report an 8% YoY increase in Q4 earnings at $1.39 per share despite a projected slight sales dip to $88.79 billion; it too has consistently surpassed earnings expectations.
Both tech giants are contending with regulatory scrutiny in China and are poised to release their Q4 financial reports after renewing their partnership earlier this year.
InvestingPro Insights
In line with the recent data from InvestingPro, Qualcomm, with a market capitalization of $121.63 billion, has a P/E ratio of 14.14, suggesting a relatively moderate valuation. The company's P/E ratio is adjusted to 12.33 for the last twelve months as of Q3 2023. Despite a revenue decline of 8.44% over the same period, the company still managed to generate a gross profit of $21.73 billion, indicating efficient operations.
Two of the InvestingPro Tips that stand out for Qualcomm include its history of consistent dividend payments and its high return on assets. The company has raised its dividend for 21 consecutive years, a testament to its commitment to returning capital to shareholders. Additionally, Qualcomm operates with a high return on assets, indicating efficient use of its resources to generate earnings.
These insights are particularly relevant given Qualcomm's upcoming Q4 earnings announcement and the potential impact on its share price. For readers interested in more in-depth analysis and additional tips, the InvestingPro platform offers a total of 11 tips for Qualcomm, providing a comprehensive view of the company's financial health and investment potential.
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