Qualcomm’s Stock (QCOM) Higher After Topping Expectations

Qualcomm’s (NASDAQ:QCOM) share price jumped after beating revenue and earnings estimates for the second quarter by $90 million and $0.14 per share. In addition, the company’s revenue and earnings also saw a healthy increase compared to the prior year period, reflecting strong momentum and product innovation.

Although, its revenue of $6 billion was flat with the previous quarter, revenue increased significantly by 12% over the prior year quarter. The strong growth in revenue was driven by automotive, networking and IoT growth areas. Revenues by segment for the second quarter: QTL, $2.25B (up 5%) and QCT, $3.68B (up 10%).

Qualcomm’s CEO said, “Our performance reflects continued execution of our strategy to lead the mobile industry across a broad set of technologies, including advanced LTE and 5G, and accelerate our growth opportunities beyond mobile into automotive, IoT, security and networking.”

On the back of QCOM’s technology roadmap and awaiting acquisition of NXP, the company appears in a solid position to extend the momentum into the following quarters. Last year, the company agreed to acquire NXP Semiconductors for $38 billion, which will expand its penetration in automotive, broad-based microcontrollers, secure identification, network processing and RF power products.

Qualcomm’s cash returns also appear safe, supported by its cash generating potential. In the second quarter alone, the company returned almost $1.1 billion to investors through dividends and buybacks.

This month, QCOM increased its quarterly dividend from $0.53 per share to $0.57 per share, representing a dividend hike of 7.5%. Its current dividend yield is around 4%, significantly higher than the industry average of 2.2%, making it a strong player for dividend investors. Furthermore, QCOM stock also appears undervalued, trading around only 16 times to earnings, relative to the industry average of 26 times. Therefore, Buying QCOM shares for dividend portfolio could be a wise strategy.

The author does not own shares of QCOM.

Alexander is an analyst for EconomicCalendar.com who specializes in index and commodity trading. His outlook is usually near-term to medium-term. He has over 10 years of experience in the financial industry and began his career at the dealing desk. Alexander holds a Bachelor’s degree in Economics from University of Delaware.