Qualcomm, Inc. (QCOM) is the leader in wireless technology and services. The explosive growth of Smartphones has allowed Qualcomm to grow earnings at a rate of 26.9% per annum since 1999. After first initiating a dividend in calendar year 2003, its payout ratio and their dividend has steadily increased. Consequently, we believe this high-quality technology specialty company is poised to continue growing and thereby providing investors above-average capital appreciation and a growing dividend income stream.
This article is intended to look at Qualcomm's "essential fundamentals at a glance" through the lens of the F.A.S.T. Graphs™ research tool. Therefore, rather than reinvent the wheel, we direct the readers to two articles written by fellow Seeking Alpha Contributors: "Qualcomm: Great Quarter, Even Stronger Year Ahead" by Ashraf Eassa, and "Qualcomm: Strong Quarter Accompanied By Stronger Outlook" by Robert Broens
A Live F.A.S.T. Graphs™ on Qualcomm
The F.A.S.T. Graphs™ on Qualcomm illustrates that this blue-chip dividend growth stock can be purchased at a sound valuation. Therefore, we rate Qualcomm a buy based on the following fundamental metrics:
- a P/E ratio of 16.4, which is on the low end of its historical norms and in line with its expected growth
- a price/sales ratio of 5.43, indicating that this dividend growth stock is reasonably priced relative to its historical normal price to sales
- the company's healthy financial condition is a plus with no debt of capital and strong free cash flow generation
Moreover, in order to conduct your own research and get a clearer perspective on Qualcomm's valuation, click on the picture above that links you to a fully functioning sample F.A.S.T. Graphs™ on Qualcomm and research this high-quality dividend growth stock deeper and faster.
Run this "tool to think with" through its paces. Use the tan navigation bar to the left of the graphs and draw multiple graphs ranging from two to 20 years of history. Discover how this tool instantly provides a clear picture of the business behind the stock and dynamically re-evaluates valuation and reveals the clear correlation between the company's earnings and price.
Note: This link will be live for 90 days beginning November 9, 2012. For more advanced instructions on how to utilize the live graph, follow this link.
Summary and Conclusions
Qualcomm is our large-cap dividend growth stock value idea of the week. At its current quotation, Qualcomm is trading at what appears to be a sound valuation relative to its growth potential. This is a long-term call for investors seeking above-average capital appreciation and a growing dividend that can be purchased at a reasonable price. Consequently, we believe this is an attractive candidate worthy of further due diligence.
Disclaimer: The opinions in this document are for informational and educational purposes only and should not be construed as a recommendation to buy or sell the stocks mentioned or to solicit transactions or clients. Past performance of the companies discussed may not continue and the companies may not achieve the earnings growth as predicted. The information in this document is believed to be accurate, but under no circumstances should a person act upon the information contained within. We do not recommend that anyone act upon any investment information without first consulting an investment advisor as to the suitability of such investments for his specific situation.