Qualcomm Stock Has Returned 2x More Than The S&P 500 Since 2018- Here’s Why

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QCOM: Qualcomm logo
QCOM
Qualcomm

Qualcomm Inc. (NASDAQ: QCOM) stock price rose 2.5x from $57 in 2018 end to around $141 currently, primarily due to favorable changes in its revenue. During this period, the company also witnessed a favorable rise in its P/S multiple, and a substantial drop in the outstanding share count, which further boosted the company’s revenue per share. Further, over the same period, the S&P 500 returned around 65%, meaning that Qualcomm stock massively outperformed the broader markets.

In our interactive dashboard, Why Qualcomm Stock Moved: QCOM Stock Has Gained 149% Since 2018, we break down the factors behind this move.

(A) QCOM’s Total Revenue has grown 74% from $22.6 billion in 2018 to almost $40 billion on an LTM basis

  • Qualcomm’s total revenue initially saw a slow rise from $22.6 billion in 2018 to $23.5 billion in 2020, before accelerating to $33.6 billion in FY ’21, and standing at as high as $39.3 billion currently (Qualcomm’s fiscal year ends in September).
  • Qualcomm, a semiconductor multinational, creates chipsets, software, and services related to wireless technology, owning and licensing patents critical to the 5G and 4G mobile communications standards, among others.
  • Qualcomm’s equipment and services sales stood at $26.7 billion as of FY ’21, making up almost 80% of FY ’21 net sales, with licensing revenues making up the remaining 20%.
  • For additional details about Qualcomm revenues and comparison to peers, see Qualcomm (QCOM) Revenue Comparison
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(B) Revenue per share (RPS) increased 126% from $15.44 in 2018 to $34.93 currently

  • Qualcomm revenue rose from $22.6 billion in 2018 to $39.3 billion currently, while the outstanding share count decreased at a quick rate too, from 1.5 billion in 2018 to 1.1 billion currently.
  • Due to this, RPS has jumped from $15.44 in FY ’18 to $34.93 currently.

(C) Price-To-Sales (P/S) multiple for Qualcomm rose strongly from 2.7x in 2018 to 7x by 2020 end but has pulled back to 4.1x currently, still around 1.5x higher than its 2018 level

  • Due to Qualcomm’s stellar sales growth between 2018-end to 2021, its P/S multiple rose strongly from 2.7x in 2018 to as high as 7x in late-2020, on the back of rising investor expectations surrounding strong 5G chipsets demand growth.
  • However, due to current geopolitical tensions and increased economic uncertainty weighing on the broader markets, the P/S multiple has pulled back substantially, currently standing at around 4.1x.
  • For additional details about the company stock returns and comparison to peers, see Qualcomm (QCOM) Stock Return Comparison.

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Returns May 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 QCOM Return 1% -23% 117%
 S&P 500 Return 0% -13% 84%
 Trefis Multi-Strategy Portfolio -1% -18% 222%

[1] Month-to-date and year-to-date as of 5/6/2022
[2] Cumulative total returns since the end of 2016

 

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