Qualcomm is an American multinational corporation based in San Diego, California. The company is incorporated in Delaware and creates semiconductors, software, and services for the wireless industry. It also holds numerous patents related to wireless technology, including those related to the 5G standard, TD-SCDMA, and WCDMA.
The stock is trading at 9.8 times consensus forward next-twelve-month normalized P/E, a level that suggests a rebound. This valuation puts Qualcomm at a slightly higher price than the 10-year historical P/E trough and -36% below the ten-year P/E mean.
Despite the recent downturn, Qualcomm stock still appears to be a solid long-term investment. Analysts expect the company to deliver a strong ROA and healthy normalized EPS growth during the next four years. The company has also diversified beyond its core Handset business and the results are paying off. For instance, in the most recent quarter, Qualcomm reported positive YoY revenue growth rates in its mobile and wireless business units. Further, the company expects these businesses to contribute as much as 30% of its revenue in Q3 FY 2022.
While Qualcomm is focused on the cell phone industry, its exposure to the semi-conductor industry is under-appreciated by the street. Apple, for example, is increasingly moving toward developing its own chips. In addition, the company doesn’t get credit for its exposure to the car industry. But in the long run, Qualcomm’s market positioning makes it a solid long-term investment, particularly with the potential for 5G and AI applications.