Yahoo Finance Qualcomm Stock in Turbulent Times: What’s the Outlook?
Qualcomm: Its Challenges, Its Strategy, Its Future
Qualcomm shares fell in challenging environment
In this series, we’ve taken a close look at the challenges and opportunities for leading mobile chipset supplier Qualcomm (QCOM). In spite of the regulatory, macroeconomic, competitive, and industry headwinds, the company is moving ahead with its growth plans.
In such turbulent times, the company managed to return $14.1 billion to its shareholders in fiscal 2015, $2.9 billion through dividend payments and $11.2 billion through share buybacks. On March 8, 2016, the company announced a dividend of $0.53 per share, which is 10% higher than the previous dividend. This increased the annual dividend yield to 4%.
Qualcomm cheaper than peers
Qualcomm stock is currently trading above $51, which is at the lower end of its 52-week range of $42.24–$71.90. The stock is cheaper than peers Intel (INTC) and Broadcom (AVGO), which are trading at the higher end of their 52-week ranges.
The lower price of Qualcomm stock is due to regulatory headwinds that were specific to the company. The stock started falling in June 2015 and fell steeply in August 2015 due to disappointing earnings for fiscal 3Q15 and performance and heating issues for its Snapdragon 810.
However, stock prices gained momentum in September and October 2015 after the company announced its new Snapdragon 820 chipset. Then came another round of steep decline in November 2015 as the company reported weaker guidance for fiscal 1Q16. It also refused to report its full-year guidance due to uncertainty surrounding China.
The stock continued to decline until February 10, 2016. The company announced positive developments at its Analyst Day conference on February 11, 2016, which brought the stock back onto a growth trajectory. Since then, the stock has increased by 19.5%. Despite this growth, it’s still cheaper than its peers who are trading at their 52-week high ranges.
About Qualcomm stock
Qualcomm has a market capitalization of $76.8 billion, of which 4.5% is held across 100 ETFs. The Market Vectors Semiconductor ETF (SMH) has a 9.0% exposure in Qualcomm stock. The company has a PE (price-to-earnings) ratio of 17, which is lower than peers Broadcom and Texas Instruments (TXN) with PE ratios of 23.9 and 19.6, respectively.
With the new developments, Qualcomm has a strong growth potential in the long term. However, things remain bleak in the near term, and fiscal 2016 will most likely be a year of transition.
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