Stellar Revenue Growth Has Helped Qualcomm Return 2x The Market Returns
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.
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|S&P 500 Return||-5%||-17%||76%|
|Trefis Multi-Strategy Portfolio||-9%||-25%||196%|
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