| | | Thank you for this thoughtful reply. I'm still wondering if nVidia conspired with ARM to impede Qualcomm's entry into the data center, but this involves understanding variables which are beyond the scope of either the board or my understanding of the technology.
Overall, I come back to my usual point: while Qualcomm is a very solid company which is growing, it is not being valued as a technology company but rather as a slow growing utility company. As this perception changes, as it will with the continued growth of auto and IoT, and the addition of an entry into the data center, I predict the market will slowly begin to reassess Qualcomm. Of course, those of us long standing shareholders get discouraged when our stock is not appreciated for the technological force that it is, but that's why investing is not a slam dunk type activity. It's not exactly a horse race, but there are horse race elements involved.
From Jim Kelleher's Argus stock letter on Q:
"QCOM shares are trading at 12.6-times our FY26 non-GAAP EPS forecast and at 12.1-times our FY27 projection. The two-year forward P/E of 11.5 is below the average P/E of 14.5 for FY21- FY25. The two-year forward relative P/E of 0.51 is below the relative multiple of 0.72 on a trailing-five-year basis and represents approximately half of the market multiple, despite the company's strong long-term growth trajectory. Our historical comparable model signals value in the $190s, below peak though above current prices. QCOM is trading at discounts to peers on most price-based multiples. Our peer-indicated value of around $300 is in a stable trend and remains well above current prices. Our discounted free cash flow model signals value above $350 based on prospects for higher long-term EPS and cash flow growth. Our blended valuation for QCOM is in the $300s, no longer rising but above current prices."
It's not a question of how the stock is valued today; it's a question of how it will be valued in a year or two. We know it's unfairly valued by today's market (for whatever reasons you want to cite), but as Apple needs a new license and a new modem, and as other sources of revenue and profit come into play, Qualcomm must be regarded as a safe and solid stock to hold.
j. |
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