QUALCOMM INC (NASDAQ:QCOM) – A Potentially Undervalued Stock With Strong Fundamentals

QUALCOMM INC (NASDAQ:QCOM) was identified as a decent value stock by our screener, which looks for companies with solid fundamentals and attractive valuations. The company’s strong profitability, healthy financials, and reasonable growth prospects make it worth a closer look for value-oriented investors.

Key Strengths

Valuation (Rating: 8/10)

• QCOM trades at a Price/Earnings (P/E) ratio of 13.23, significantly below both the industry average (36.75) and the S&P 500 average (26.55).
• The Price/Forward Earnings ratio of 12.27 is also lower than most peers, suggesting the stock may be undervalued.
• A low PEG ratio indicates that earnings growth is not fully reflected in the stock price.

Profitability (Rating: 9/10)

• QCOM boasts a Return on Equity (ROE) of 39.82%, outperforming 93.6% of its semiconductor industry peers.
• The company maintains strong operating (27.64%) and net (26.11%) margins, reflecting efficient cost management.
• Consistent profitability over the past five years reinforces its financial stability.

Financial Health (Rating: 8/10)

• A Debt-to-Equity ratio of 0.48 indicates a balanced capital structure.
• Strong liquidity metrics, including a Current Ratio of 2.73 and Quick Ratio of 2.08, ensure short-term obligations are well-covered.
• The Altman-Z score of 6.04 suggests low bankruptcy risk.

Growth (Rating: 5/10)

• While past growth has been strong (24.2% EPS growth YoY, 14.8% revenue growth), future expectations are more modest (~7% EPS growth).
• The company’s growth rate is slowing, which may explain the discounted valuation.

Dividend (Rating: 7/10)

• QCOM offers a 2.41% dividend yield, slightly above the S&P 500 average.
• The company has a 10-year track record of maintaining and growing its dividend.

Why This Matters for Value Investors

QCOM appears undervalued relative to its earnings power and financial strength. While growth expectations are tempered, the company’s profitability and stability make it a candidate for value investors seeking a margin of safety.

For a deeper analysis, review the full fundamental report on QCOM.

Our Decent Value Stocks screener lists more stocks with strong valuations and fundamentals.

Disclaimer

This is not investment advice. Always conduct your own research before making investment decisions.