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Can 5G-Driven Revenues Aid Qualcomm (QCOM) Q2 Earnings?
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Qualcomm Incorporated (QCOM - Free Report) is scheduled to report second-quarter fiscal 2020 results, after the closing bell, on Apr 29. In the last reported quarter, the company delivered a positive earnings surprise of 16.5%, surpassing the Zacks Consensus Estimate by 14 cents. In the fiscal second quarter, consolidated revenues are likely to have improved year over year, despite coronavirus-induced headwinds, driven by continued 5G chip designs for innovative 5G system solutions.
Factors at Play
During the fiscal second quarter, Qualcomm marked its foray into the automotive command and control systems with the launch of the first-of-its-kind automotive platform — Snapdragon Ride — which enables automakers to transform their vehicles into self-driving cars using AI. In addition to hardware and software support for advanced driver assistance systems under Level 1 and Level 2 systems, it will support the connection of autonomous cars to high-speed cellular networks under the Cellular Vehicle to Everything technology. Snapdragon Ride will also incorporate Level 4 and Level 5 technology in the system, which will facilitate autonomous urban driving. This is likely to have translated into incremental revenues for the company.
Moreover, Qualcomm introduced Snapdragon-backed third-generation 5G modem — X60 — to boost network performance and provide flexibility to operators with optimized spectrum resources amid universal migration from 4G to a full-fledged 5G ecosystem. Designed specifically for 5G services with the help of the sub-6 GHz spectrum and millimeter wave technology, these chips will be mostly found in high-end smartphone devices. Such innovative product launches are likely to have benefited the quarterly performance.
However, latent trade-related tensions and a fractured relationship with China, which is one of the most important markets of Qualcomm, are likely to have harmed its supply-chain management and strained margins. In addition, fierce competitive pressure from low-cost chipmakers amid the coronavirus-led worldwide mayhem is likely to have hurt the bottom line.
For the first quarter of fiscal 2020, Qualcomm expects revenues of $4.9-$5.7 billion. The Zacks Consensus Estimate for the same is pegged at $5,094 million. The company recorded revenues of $4,982 million in the year-earlier quarter. Management anticipates non-GAAP earnings of 80-95 cents per share. The consensus mark for earnings is currently pegged at 77 cents per share, flat year over year.
Q2 Developments
During the quarter, Qualcomm announced a 5% year-over-year hike in its quarterly dividend payout to 65 cents per share or $2.60 on an annualized basis. The company expects 5G adoption to be faster than 4G owing to large-scale commercialization and availability of chipsets across different price points. Qualcomm is also seeking to expand its product portfolio and develop mobile phone chips for the masses in addition to high-end smartphones. This move is intended to drive sales and achieve economies of scale through mass production.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Qualcomm this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This, however, is not the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -10.65%, with the former being pegged at 69 cents and the latter at 77 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Qualcomm currently has a Zacks Rank #3.
Stocks to Consider
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:
The Earnings ESP for Vocera Communications, Inc. is +6.42% and it carries a Zacks Rank of 2. The company is set to report quarterly numbers on Apr 23.
The Earnings ESP for CenturyLink, Inc. is +1.41% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on May 6.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Image: Shutterstock
Can 5G-Driven Revenues Aid Qualcomm (QCOM) Q2 Earnings?
Qualcomm Incorporated (QCOM - Free Report) is scheduled to report second-quarter fiscal 2020 results, after the closing bell, on Apr 29. In the last reported quarter, the company delivered a positive earnings surprise of 16.5%, surpassing the Zacks Consensus Estimate by 14 cents. In the fiscal second quarter, consolidated revenues are likely to have improved year over year, despite coronavirus-induced headwinds, driven by continued 5G chip designs for innovative 5G system solutions.
Factors at Play
During the fiscal second quarter, Qualcomm marked its foray into the automotive command and control systems with the launch of the first-of-its-kind automotive platform — Snapdragon Ride — which enables automakers to transform their vehicles into self-driving cars using AI. In addition to hardware and software support for advanced driver assistance systems under Level 1 and Level 2 systems, it will support the connection of autonomous cars to high-speed cellular networks under the Cellular Vehicle to Everything technology. Snapdragon Ride will also incorporate Level 4 and Level 5 technology in the system, which will facilitate autonomous urban driving. This is likely to have translated into incremental revenues for the company.
Moreover, Qualcomm introduced Snapdragon-backed third-generation 5G modem — X60 — to boost network performance and provide flexibility to operators with optimized spectrum resources amid universal migration from 4G to a full-fledged 5G ecosystem. Designed specifically for 5G services with the help of the sub-6 GHz spectrum and millimeter wave technology, these chips will be mostly found in high-end smartphone devices. Such innovative product launches are likely to have benefited the quarterly performance.
However, latent trade-related tensions and a fractured relationship with China, which is one of the most important markets of Qualcomm, are likely to have harmed its supply-chain management and strained margins. In addition, fierce competitive pressure from low-cost chipmakers amid the coronavirus-led worldwide mayhem is likely to have hurt the bottom line.
For the first quarter of fiscal 2020, Qualcomm expects revenues of $4.9-$5.7 billion. The Zacks Consensus Estimate for the same is pegged at $5,094 million. The company recorded revenues of $4,982 million in the year-earlier quarter. Management anticipates non-GAAP earnings of 80-95 cents per share. The consensus mark for earnings is currently pegged at 77 cents per share, flat year over year.
Q2 Developments
During the quarter, Qualcomm announced a 5% year-over-year hike in its quarterly dividend payout to 65 cents per share or $2.60 on an annualized basis. The company expects 5G adoption to be faster than 4G owing to large-scale commercialization and availability of chipsets across different price points. Qualcomm is also seeking to expand its product portfolio and develop mobile phone chips for the masses in addition to high-end smartphones. This move is intended to drive sales and achieve economies of scale through mass production.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Qualcomm this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This, however, is not the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -10.65%, with the former being pegged at 69 cents and the latter at 77 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
QUALCOMM Incorporated Price and EPS Surprise
QUALCOMM Incorporated price-eps-surprise | QUALCOMM Incorporated Quote
Zacks Rank: Qualcomm currently has a Zacks Rank #3.
Stocks to Consider
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:
InterDigital, Inc. (IDCC - Free Report) is set to release quarterly numbers on May 7. It has an Earnings ESP of +152% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Earnings ESP for Vocera Communications, Inc. is +6.42% and it carries a Zacks Rank of 2. The company is set to report quarterly numbers on Apr 23.
The Earnings ESP for CenturyLink, Inc. is +1.41% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on May 6.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>