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Can Healthy Revenue Growth Aid Qualcomm (QCOM) Q3 Earnings?

·3 min read

Qualcomm Incorporated QCOM is set to report third-quarter fiscal 2022 results on Jul 27, after the closing bell. In the last reported quarter, the company delivered an earnings surprise of 10.3%. It pulled off a trailing four-quarter earnings surprise of 11.4%, on average.

This San Diego, CA-based company is expected to have recorded higher revenues year over year, driven by the ramp-up in 5G-enabled chips and strength in its Snapdragon portfolio. The company is increasingly benefiting from advanced radio frequency front-end solutions for high-performance 5G devices and automotive chips.

Factors at Play

During the quarter, Qualcomm collaborated with AMD to optimize the Qualcomm FastConnect connectivity system for AMD Ryzen processor-based computing platforms. The AMD Manageability processor and the FastConnect 6900 will help unlock enhanced capabilities for IT to manage systems, offering professional-strength remote manageability for users in the new, hybrid workplace. Such innovative products are likely to have translated into higher revenues in the quarter.

In the fiscal third quarter, Qualcomm completed the acquisition of Arriver from SSW Partners. The transformative deal is expected to offer Qualcomm a firmer footing in the emerging market of driver-assistance technology, as it aims to extend the Snapdragon Ride Advanced Driver Assistance Systems (ADAS) portfolio.

The Arriver business of Veoneer operates the dedicated software unit focused on sensor perception and drive policy, including a full stack of features and functions. With the acquisition, Qualcomm aims to incorporate Arriver's Computer Vision, Drive Policy and Driver Assistance assets into its ADAS portfolio to deliver an open and competitive platform for automakers to better compete with rivals within the self-driving vehicle market. This, in turn, is likely to augment its automotive business as it strives to boost revenues beyond chipmaking for the smartphone market. These are likely to get reflected in the upcoming results.

For the June quarter, the Zacks Consensus Estimate for revenues is pegged at $10,881 million, indicating growth of 35% from the year-ago quarter’s reported figure. The consensus estimate for adjusted earnings per share stands at $2.86, which suggests an increase of 48.9%.

Earnings Whispers

Our proven model does not predict an earnings beat for Qualcomm for the fiscal third quarter. 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 -0.63%, with the former pegged at $2.84 and the latter at $2.86. 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 and EPS Surprise
QUALCOMM Incorporated Price and EPS Surprise

QUALCOMM Incorporated price-eps-surprise | QUALCOMM Incorporated Quote

Zacks Rank: Qualcomm 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 season:

Keysight Technologies, Inc. KEYS is set to release quarterly numbers on Aug 17. It has an Earnings ESP of +1.23% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Earnings ESP for Qorvo Inc. QRVO is +0.41% and it carries a Zacks Rank of 3. The company is set to report quarterly numbers on Aug 3.

The Earnings ESP for Apple Inc. AAPL is +0.88% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Jul 28.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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QUALCOMM Incorporated (QCOM) : Free Stock Analysis Report
Apple Inc. (AAPL) : Free Stock Analysis Report
Keysight Technologies Inc. (KEYS) : Free Stock Analysis Report
Qorvo, Inc. (QRVO) : Free Stock Analysis Report
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