Here’s Why Qualcomm Stock’s 2.5x Rise Since 2018 Does Not Come As A Surprise

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QCOM: Qualcomm logo
QCOM
Qualcomm

Qualcomm Inc. (NASDAQ: QCOM) stock price grew more than 2.5x from around $57 at 2018 end to $144 currently, driven evenly by a jump in its revenues and P/S multiple. Additionally, a sharp drop in the company’s outstanding share count has also helped boost its stock.

In our interactive dashboard, Why Qualcomm Stock Moved: QCOM Stock Has Gained 153% Since 2018, we break down the factors behind this move.

(A) Qualcomm’s Total Revenue has grown 59% from $22.6 billion in 2018 to $36 billion on an LTM basis

  • Qualcomm’s total revenue first rose from $22.6 billion in FY ’18 to $24.3 billion in FY ’19, before pulling back to $23.5 billion in FY ’20 as the pandemic hampered sales.
  • However, driven by the mass global rollout of 5G and rising chipset prices, sales then jumped to $33.6 billion in FY ’21 (Qualcomm’s fiscal year ends in September), and currently stand at a strong $36 billion.
  • Equipment and services sales make up the bulk of Qualcomm’s revenues, with $26.7 billion of the company’s sales coming from this segment as of FY ’21, making up almost 80% of total revenue.
  • For details about Qualcomm’s revenues and comparison to peers, see Qualcomm (QCOM) Revenue Comparison
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(B) Revenue per share (RPS) increased more than 2x from $15.44 in 2018 to $32.02 currently

  • Qualcomm’s revenue rose from $22.6 billion in 2018 to $36 billion currently, while the outstanding share count decreased strongly from 1.5 billion in 2018 to around 1.1 billion currently.
  • Due to this, RPS has risen sharply from $15.44 in FY ’18 to $32.02 currently.

(C) Price-To-Sales (P/S) multiple for Qualcomm rose steadily from 2.8x in 2018 to 7.3x in 2020, but stands at 4.5x currently, still more than 1.6x higher than its 2018 level

  • Due to rising expectations around Qualcomm’s sales recovery since the pandemic and continuing demand growth for its chipsets, its P/S multiple rose steadily to over 7x in 2020.
  • However, amidst current geopolitical tensions dragging down the broader markets, the P/S multiple has pulled back and currently stands at a little under 5x.
  • For additional details about the company’s historical returns and comparison to peers, see Qualcomm (QCOM) Stock Return.

What if you’re looking for a more balanced portfolio instead? Here’s a high-quality portfolio that’s beaten the market consistently since the end of 2016.

Returns Mar 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 QCOM Return -16% -21% 121%
 S&P 500 Return -3% -11% 90%
 Trefis MS Portfolio Return -4% -14% 239%

[1] Month-to-date and year-to-date as of 3/16/2022
[2] Cumulative total returns since the end of 2016

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