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Will Higher QCT Revenues Aid Qualcomm's (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 fiscal second quarter, revenues from the Qualcomm CDMA Technologies (QCT) segment, which accounts for the lion’s share of total revenues, are likely to have improved despite coronavirus-induced headwinds. The upside can be attributed to continued 5G chip designs for innovative 5G system solutions.
Factors at Play
The QCT segment includes CDMA-based integrated circuit devices (chips) and system software for wireless voice and data communications, as well as GPS products, primarily used in mobile phones, wireless data access cards and infrastructure equipment.
During the 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. The company also 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. These products are likely to have translated into incremental revenues for the company.
However, the company expects worldwide mobile station modem (MSM) chipset unit shipments to be down with lower volumes in the premium and high tiers due to the transition to 5G. The Zacks Consensus Estimate for MSM shipments is currently pegged at 132 million units, implying a 14.8% decline from the year-ago quarter’s reported number.
The consensus mark for revenues from QCT is pegged at $4,159 million, indicating an improvement from $3,722 million reported in the year-earlier quarter. The consensus mark for EBT from the segment stands at $637 million, suggesting an increase from $542 million. Despite supply-chain constraints due to the coronavirus pandemic and fierce competitive pressure from low-cost chipmakers, Qualcomm is likely to have witnessed improved margins owing to top-line growth driven by strength in the innovative products portfolio.
Overall Expectations
For the second 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 reported 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.
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 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 time:
The Earnings ESP for Motorola Solutions, Inc. (MSI - Free Report) is +3.34% and it carries a Zacks Rank of 3. The company is set to report quarterly numbers on May 7.
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.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Will Higher QCT Revenues Aid Qualcomm's (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 fiscal second quarter, revenues from the Qualcomm CDMA Technologies (QCT) segment, which accounts for the lion’s share of total revenues, are likely to have improved despite coronavirus-induced headwinds. The upside can be attributed to continued 5G chip designs for innovative 5G system solutions.
Factors at Play
The QCT segment includes CDMA-based integrated circuit devices (chips) and system software for wireless voice and data communications, as well as GPS products, primarily used in mobile phones, wireless data access cards and infrastructure equipment.
During the 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. The company also 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. These products are likely to have translated into incremental revenues for the company.
However, the company expects worldwide mobile station modem (MSM) chipset unit shipments to be down with lower volumes in the premium and high tiers due to the transition to 5G. The Zacks Consensus Estimate for MSM shipments is currently pegged at 132 million units, implying a 14.8% decline from the year-ago quarter’s reported number.
The consensus mark for revenues from QCT is pegged at $4,159 million, indicating an improvement from $3,722 million reported in the year-earlier quarter. The consensus mark for EBT from the segment stands at $637 million, suggesting an increase from $542 million. Despite supply-chain constraints due to the coronavirus pandemic and fierce competitive pressure from low-cost chipmakers, Qualcomm is likely to have witnessed improved margins owing to top-line growth driven by strength in the innovative products portfolio.
Overall Expectations
For the second 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 reported 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.
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 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 time:
Arista Networks, Inc. (ANET - Free Report) is set to release quarterly numbers on May 5. It has an Earnings ESP of +1.39% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Earnings ESP for Motorola Solutions, Inc. (MSI - Free Report) is +3.34% and it carries a Zacks Rank of 3. The company is set to report quarterly numbers on May 7.
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.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>