Qualcomm Inc.
(
QCOM
) is slated to release its second quarter 2012 results on
Wednesday, April 18, after the closing bell. The current Zacks
Consensus Estimate for the second quarter is pegged at 86 cents per
share, representing an annualized growth of 11.87%.
With respect to earnings surprises over the trailing four
quarters, Qualcomm has outperformed the Zacks Consensus Estimate in
three of the last four quarters. The average earnings surprise was
a positive 3.67%, implying that the company has outdone the Zacks
Consensus Estimate by the same magnitude over the last four
quarters.
Second Quarter Highlights
On February 1, 2012, Qualcomm reported its first quarter 2012
financial results. On a GAAP basis, quarterly net income was $1,401
million or 81 cents per share compared with a net income of $1,170
million or 71 cents per share in the year-ago quarter. However, the
first quarter of fiscal 2012 adjusted (excluding special items) EPS
came in at 85 cents, outpacing the Zacks Consensus Estimate of 81
cents. Such outstanding performance was mainly driven by the higher
demand for smartphone chipsets.
Quarterly total revenue of $4,681 million was up 40% year over
year, surpassing the Zacks Consensus Estimate of $4,569
million.
Agreement of Estimate Revisions
In the last 30 days, out of the seven analysts covering the
stock, three analysts increased the EPS estimate while none
decreased the same for the second quarter of 2012. Similarly, for
the third quarter of fiscal 2012, out of the six analysts covering
the stock, three analysts raised the EPS estimate while none moved
in the opposite direction.
For fiscal 2012, over the last 30 days, of the seven analysts
covering the stock, three analysts raised the EPS estimate while
none slashed the EPS estimate. Likewise, for fiscal 2013, in the
last 30 days, out of the seven analysts, only three analysts raised
the EPS estimate.
The positive sentiments of analysts stem from their optimism
regarding Qualcomm's Snapdragon processor. As the roll out of LTE
networks accelerate with the growing demand for high-end
smartphones, the demand for Snapdragon processor also increases as
these processors are integrated within these smartphones.
Magnitude of Estimate Revisions
During the last 30 days, the current Zacks Consensus Estimate
was just a penny above the previous estimate of 85 cents for the
second quarter of 2012 and 2 cents above the earlier estimate of 79
cents for the third quarter of 2012. Similarly, for fiscal 2012,
during the last 30 days, the current Zacks Consensus Estimate was 7
cents above the earlier estimate of $3.38. Likewise, for fiscal
2013, the current Zacks Consensus Estimate was 12 cents above the
earlier estimate of $3.81.
Earnings Surprises
The current Zacks Consensus Estimates for the ongoing quarter
and the next quarter reflects an upside potential of 2.33% and 2.47
% (essentially a proxy for future earnings surprises),
respectively. Similarly, for fiscal 2012 and 2013, the Zacks
Consensus Estimates contain growth potentials of 2.61% and 4.84%,
respectively.
Our Recommendation
We believe thatthe company's record-high earnings,strong balance
sheet and solid management outlook for the current fiscal year will
act as positive catalysts in the long run. Moreover, the growing
popularity of smartphones and tablets coupled with increased
deployment of 3G/4G networks will further drive the stock
upward.
However, stiff competition from formidable rivals like
Broadcom Corporation
(
BRCM
) and
Texas Instruments Inc.
(
TXN
) as well as lower ASP of smartphones will negatively impact
Qualcomm's royalty business going forward.
We maintain our long-term Outperform recommendation on Qualcomm.
Currently, Qualcommhas a Zacks #2 Rank, implying a short-term Buy
rating on the stock.
BROADCOM CORP-A (
BRCM
): Free Stock Analysis Report
QUALCOMM INC (
QCOM
): Free Stock Analysis Report
TEXAS INSTRS (
TXN
): Free Stock Analysis Report
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