Qualcomm (QCOM) looks like it will open the trading day down 5% percent or more. The company just reported their Q2 earnings and revenuesף both beat expectations. However, guidance was a little light and the shares appear they are set for a 5% pull back or so when the stock opens today. I would consider QCOM at $61-$62 a share to be a gift and I would add shares there if it gets to those levels. Let's take a look at its 2nd quarter earnings report, guidance and why it is a solid pick up on any significant sell-off.
Earnings report -
- EPS after adjustments came in at $1.17 a share, a penny above consensus expectations.
- Revenue came in at $6.12B, $50mm above estimates and up 24% Y/Y.
- The company reported 173M MSM chip shipments in the quarter, up 14% Y/Y and at the high end of previous guidance.
- Free cash flow was up 10% Y/Y to almost $2B
- The company expects FQ3 revenue of $5.8B-$6.3B and EPS of $0.97-$1.05 vs. consensus of $5.88B and $1.04.
- Qualcomm also projects FY13 revenue of $24B-$25B and EPS of $4.40-$4.55 vs. consensus of $24.1B and $4.53
5 reasons QCOM at $61 -$62 a share is a solid bargain:
- This arms merchant supplies Apple (AAPL), Samsung (SSNLF.PK) and Nokia (NOK) among other manufacturers. Therefore, it is not dependent on the success of any one player just the continued growth of the smartphone market.
- Pricing in the pre-market sell-off, QCOM sells at under 13x 2014's projected earnings, below its five year historical average (17.5).
- Analysts also expect over 25% sales increases this fiscal year and over 10% in FY2014. The stock sports a five year projected PEG of under 1 (.96).
- The shares yield over 2% and the company has over $13B in net cash on the balance sheet.
- The median price target by the 38 analysts that cover the shares is $76.50 a share. S&P has its highest rating "Strong Buy" on the shares with a $84 price target.