Here’s How Qualcomm Stock Has Managed To Double Market Returns Since 2018

-13.89%
Downside
170
Market
146
Trefis
QCOM: Qualcomm logo
QCOM
Qualcomm

Qualcomm Inc. (NASDAQ: QCOM) stock price rose almost 2.1x from $57 in 2018 end to almost $120 currently, primarily due to favorable changes in its revenues. During this period, the company witnessed a stellar 86% jump in revenues, and combined with a strong drop in the outstanding share count, the company’s stock price has rallied, despite a drop in its P/S multiple. Additionally, over the same period, the S&P 500 returned around 55%, meaning that Qualcomm stock managed to post roughly double these returns since late 2018.

In our interactive dashboard, Why Qualcomm Stock Moved: QCOM Stock Has Gained 109% Since 2018, we break down the factors behind this move.

(A) Qualcomm’s Total Revenue has grown 86% from $22.6 billion in FY 2017 to $42.1 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, rising to $33.6 billion, as the accelerated roll-out of 5G drove both sales volumes and the average sales price higher.
  • The sales growth has persisted into FY ’22, and LTM sales currently stand at $42 billion.
  • Equipment and services revenues made up the bulk of Qualcomm’s sales in FY ’21, coming in at a little under 80% of the company’s total revenue, bringing in $26.7 billion.
  • 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 122% from $16.92 in 2018 to $37.51 currently

  • Qualcomm’s revenue rose from $22.6 billion in 2018 to around $42 billion currently, while the outstanding share count decreased at a quick rate, too, from 1.3 billion in 2018 to around 1.1 billion currently.
  • Due to this, RPS has jumped from $16.92 in FY ’18 to $37.51 currently.

(C) Price-To-Sales (P/S) multiple for Qualcomm rose strongly from 3.4x in 2018 to 7.3x by 2020 end, but has pulled back to 3.2x currently, still slightly lower than its 2018 level

  • Qualcomm’s P/S multiple rose strongly to around 7.3x by late 2020, on the back of rising investor expectations surrounding increased chipset and licensing revenues.
  • However, due to the increased economic uncertainty weighing on the broader markets and ongoing supply chain concerns, the P/S multiple has pulled back, currently standing at around 3.2x.
  • 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 Oct 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 QCOM Return 5% -35% 82%
 S&P 500 Return 7% -19% 72%
 Trefis Multi-Strategy Portfolio 6% -22% 208%

[1] Month-to-date and year-to-date as of 10/27/2022
[2] Cumulative total returns since the end of 2016

 

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