Qualcomm Inc. (NASDAQ: QCOM ) the stock price has risen nearly 2.1 times from $57 at the end of 2018 to nearly $120 currently, mainly due to favorable changes in earnings. During that period, the company’s revenues grew by 86%, and combined with a sharp drop in the number of shares outstanding, the company’s stock price increased despite a drop in the P/S ratio. Additionally, the S&P 500 has returned roughly 55% over the same period, meaning Qualcomm stock has managed to post roughly double its return since the end of 2018.
On our interactive dashboard Why Qualcomm Stock Moved: QCOM shares are up 109% since 2018.we break down the factors behind this move.
(A) Qualcomm’s total revenue grew 86% from $22.6 billion in fiscal 2017 to $42.1 billion on an LTM basis
- Between fiscal years 2018 and 2020, Qualcomm’s total revenue is almost flat at around $22 billion to $24 billion (Qualcomm’s fiscal year ends in September).
- However, sales rose to $33.6 billion in fiscal 2021 as accelerated 5G deployment led to growth in both sales volume and average sales price.
- Sales growth continued in FY22, and LTM sales now stand at $42 billion.
- Hardware and services revenue made up the bulk of Qualcomm’s sales in FY21, accounting for just under 80% of the company’s total revenue of $26.7 billion.
- For more information on Qualcomm’s revenue and comparison to peers, see Qualcomm (QCOM) Revenue Comparison.
(B) Earnings per share (RPS) increased 122% from $16.92 in 2018 to $37.51 currently
- Qualcomm’s revenue has grown from $22.6 billion in 2018 to around $42 billion currently, while the number of shares outstanding has also fallen rapidly from 1.3 billion in 2018 to around 1.1 billion currently.
- This has seen RPS jump from $16.92 in FY18 to $37.51 currently.
(C) Price-to-Sales (P/S) ratio for Qualcomm rose significantly from 3.4x in 2018 to 7.3x by the end of 2020, but is currently back to 3.2x, still slightly below 2018 levels .
- By the end of 2020, Qualcomm’s P/S ratio has risen significantly to around 7.3x amid rising investor expectations for increased chipset and license revenue.
- However, due to growing economic uncertainty in the broader markets and ongoing supply chain issues, the P/S ratio has fallen and is now around 3.2x.
- For more information on the company’s stock returns and comparisons with peers, see Qualcomm (QCOM) stock performance comparison.
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| Returns | October 2022 MTD [1] |
2022 year Since the beginning of the year [1] |
2017-22 In total [2] |
| The return of QCOM | 5% | -35% | 82% |
| The return of the S&P 500 | 7% | -19% | 72% |
| Trefis Multi-Strategy Portfolio | 6% | -22% | 208% |
[1] From the beginning of the month and year as of 10/27/2022
[2] Cumulative total return since the end of 2016
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
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