Stellar Revenue Growth Has Helped Qualcomm Return 2x The Market Returns

+46.71%
Upside
115
Market
168
Trefis
QCOM: Qualcomm logo
QCOM
Qualcomm

Qualcomm Inc. (NASDAQ: QCOM) stock price rose more than 2.3x from $57 in 2018 end to over $132 currently, primarily due to favorable changes in its sales. During this period, the company witnessed a stellar 74% jump in revenues, and combined with a higher P/S multiple and a substantial drop in the outstanding share count, the company’s stock price has rallied. Further, over the same period, the S&P 500 returned around 65%, meaning that Qualcomm stock managed to post double these returns since 2018-end.

In our interactive dashboard, Why Qualcomm Stock Moved: QCOM Stock Has Gained 132% Since 2018, we break down the factors behind this move.

(A) Qualcomm’s Total Revenue has grown 74% from $22.6 billion in FY 2018 to $39.2 billion on an LTM basis

  • Qualcomm’s total revenue was roughly stagnant around $22-24 billion between FY 2018 and FY 2020 (Qualcomm’s fiscal year ends in September).
  • However, sales took off in FY 2021, coming in at $33.6 billion, as the accelerated roll-out of 5G drove up both sales volumes and average sales price.
  • The sales growth has persisted into FY ’22, and LTM sales currently stand at almost $40 billion.
  • Equipment and services revenues make up the bulk of Qualcomm’s sales, coming in at almost 80% of the company’s total revenue at $26.7 billion as of FY ’21.
  • For additional details about Qualcomm’s 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’s revenue rose from $22.6 billion in 2018 to $39.3 billion currently, while the outstanding share count decreased at a quick rate, from 1.5 billion in 2018 to around 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 2.9x in 2018 to 7.5x by 2020 end, but has pulled back to 3.8x currently, still around 1.3x higher than its 2018 level

  • Qualcomm’s P/S multiple rose strongly to around 7.5x by late 2020, on the back of rising investor expectations surrounding increased chipset sales and licensing revenues.
  • However, due to the current geopolitical tensions and increased economic uncertainty weighing on the broader markets, the P/S multiple has pulled back, currently standing at around 3.8x.
  • For additional details about the company stock returns and comparison to peers, see Qualcomm (QCOM) Stock Return Comparison.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

Returns May 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 QCOM Return -5% -28% 103%
 S&P 500 Return -5% -17% 76%
 Trefis Multi-Strategy Portfolio -9% -25% 196%

[1] Month-to-date and year-to-date as of 5/12/2022
[2] Cumulative total returns since the end of 2016

 

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