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Will Qualcomm (QCOM) Disappoint Investors in Q2 Earnings?
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Qualcomm Inc. (QCOM - Free Report) , the largest manufacturer of wireless chipsets based on baseband technology in the U.S., is scheduled to report second-quarter fiscal 2017 numbers on Apr 19, after market close.
Last quarter, the company’s bottom line matched the Zacks Consensus Estimate. Moreover, the company’s earnings surpassed the Zacks Consensus Estimate in three of the previous four quarters, with an average beat of 13.01%.
However, shares of Qualcomm underperformed the Zacks classified Wireless Equipment industry’s growth over the past three months. The stock witnessed a loss of 21.1% compared with the industry’s decline of 8.6%.
Let’s see how things are shaping up for this announcement.
Factors at Play
Qualcomm has been facing regulatory proceedings of late. The company was recently charged with fines due to unfair business practices and licensing royalty payments. Aggressive competition in the mobile phone chipset market has also been hurting Qualcomm’s profits. The company faces severe competitive threats from its closest rival, Intel Corporation (INTC - Free Report) , which has been redesigning its chipsets for the mobile computing market. We wait to see if this hurts Qualcomm’s sales in the fiscal second quarter.
On the other hand, Qualcomm’s updated Snapdragon processors and applications to retain its leadership in the global wireless baseband chipset market looks impressive. Patent license network deals, tie-up with AT&T Inc. (T - Free Report) and Ericsson for 5G network trials and the launch of China’s first end-to-end data call bode well for Qualcomm.
Moreover, the company’s foray into areas like automotive, networking and mobile computing bode well for its growth prospects. We expect such strategic business moves to improve Qualcomm's chipset sales in the to-be-reported quarter.
We are also impressed with Qualcomm’s decision to approve a 7.5% increase in its quarterly cash dividend. The quarterly cash dividend rose from 53 cents to 57 cents per share of common stock and will be effective for quarterly dividends payable after Mar 22, 2017.
Earnings Whispers
Our proven model does not conclusively show that Qualcomm is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below.
Zacks ESP: Qualcomm has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $1.05. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Qualcomm currently carries a Zacks Rank #4 (Sell).
We caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
T-Mobile US Inc. (TMUS - Free Report) from the Zacks categorized broader Computer and Technology sector has the right combination of elements to post an earnings beat when it expectedly reports first-quarter 2017 results on Apr 25. T-Mobile US has an Earnings ESP of +2.94% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Earnings of T-Mobile US surpassed the Zacks Consensus Estimate in each of the previous four quarters, with an average beat of 75.66%
Sell These Stocks. Now.
Just released, today's 220 Zacks Rank #5 Strong Sells demand urgent attention. If any are lurking in your portfolio or Watch List, they should be removed immediately. These are sinister companies because many appear to be sound investments. However, from 1988 through 2016, stocks from our Strong Sell list have actually performed 6X worse than the S&P 500. See today's Zacks "Strong Sells" absolutely free >>
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Will Qualcomm (QCOM) Disappoint Investors in Q2 Earnings?
Qualcomm Inc. (QCOM - Free Report) , the largest manufacturer of wireless chipsets based on baseband technology in the U.S., is scheduled to report second-quarter fiscal 2017 numbers on Apr 19, after market close.
Last quarter, the company’s bottom line matched the Zacks Consensus Estimate. Moreover, the company’s earnings surpassed the Zacks Consensus Estimate in three of the previous four quarters, with an average beat of 13.01%.
However, shares of Qualcomm underperformed the Zacks classified Wireless Equipment industry’s growth over the past three months. The stock witnessed a loss of 21.1% compared with the industry’s decline of 8.6%.
Let’s see how things are shaping up for this announcement.
Factors at Play
Qualcomm has been facing regulatory proceedings of late. The company was recently charged with fines due to unfair business practices and licensing royalty payments. Aggressive competition in the mobile phone chipset market has also been hurting Qualcomm’s profits. The company faces severe competitive threats from its closest rival, Intel Corporation (INTC - Free Report) , which has been redesigning its chipsets for the mobile computing market. We wait to see if this hurts Qualcomm’s sales in the fiscal second quarter.
On the other hand, Qualcomm’s updated Snapdragon processors and applications to retain its leadership in the global wireless baseband chipset market looks impressive. Patent license network deals, tie-up with AT&T Inc. (T - Free Report) and Ericsson for 5G network trials and the launch of China’s first end-to-end data call bode well for Qualcomm.
Moreover, the company’s foray into areas like automotive, networking and mobile computing bode well for its growth prospects. We expect such strategic business moves to improve Qualcomm's chipset sales in the to-be-reported quarter.
We are also impressed with Qualcomm’s decision to approve a 7.5% increase in its quarterly cash dividend. The quarterly cash dividend rose from 53 cents to 57 cents per share of common stock and will be effective for quarterly dividends payable after Mar 22, 2017.
Earnings Whispers
Our proven model does not conclusively show that Qualcomm is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below.
Zacks ESP: Qualcomm has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $1.05. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Qualcomm currently carries a Zacks Rank #4 (Sell).
We caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
QUALCOMM Incorporated Price and EPS Surprise
QUALCOMM Incorporated Price and EPS Surprise | QUALCOMM Incorporated Quote
A Key Pick
T-Mobile US Inc. (TMUS - Free Report) from the Zacks categorized broader Computer and Technology sector has the right combination of elements to post an earnings beat when it expectedly reports first-quarter 2017 results on Apr 25. T-Mobile US has an Earnings ESP of +2.94% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Earnings of T-Mobile US surpassed the Zacks Consensus Estimate in each of the previous four quarters, with an average beat of 75.66%
Sell These Stocks. Now.
Just released, today's 220 Zacks Rank #5 Strong Sells demand urgent attention. If any are lurking in your portfolio or Watch List, they should be removed immediately. These are sinister companies because many appear to be sound investments. However, from 1988 through 2016, stocks from our Strong Sell list have actually performed 6X worse than the S&P 500. See today's Zacks "Strong Sells" absolutely free >>