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Today we're going to take a look at the well-established QUALCOMM Incorporated (NASDAQ:QCOM). The company's stock received a lot of attention from a substantial price movement on the NASDAQGS over the last few months, increasing to US$178 at one point, and dropping to the lows of US$154. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether QUALCOMM's current trading price of US$157 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at QUALCOMM’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Check out our latest analysis for QUALCOMM
What's The Opportunity In QUALCOMM?
Great news for investors – QUALCOMM is still trading at a fairly cheap price according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. we find that QUALCOMM’s ratio of 17.23x is below its peer average of 29.66x, which indicates the stock is trading at a lower price compared to the Semiconductor industry. However, given that QUALCOMM’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
What does the future of QUALCOMM look like?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to grow by 24% over the next couple of years, the future seems bright for QUALCOMM. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What This Means For You
Are you a shareholder? Since QCOM is currently below the industry PE ratio, it may be a great time to increase your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current price multiple.