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Can Healthy Revenue Growth Drive Qualcomm (QCOM) Q1 Earnings?

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Qualcomm Incorporated QCOM is set to report first-quarter fiscal 2022 results on Feb 2, after the closing bell. In the last reported quarter, the company delivered an earnings surprise of 12.8%. It pulled off a trailing four-quarter earnings surprise of 11.2%, 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 benefits from advanced radio frequency (RF) front-end solutions for high-performance 5G devices.

Factors at Play

During the quarter, Qualcomm launched its latest 5G mobile platform — Snapdragon 8 Gen 1. Featuring advanced 5G, AI, gaming, camera and Wi-Fi and Bluetooth technologies, the Snapdragon 8 is likely to transform the next generation of flagship mobile devices. The new mobile platform brings unparalleled connectivity, photography, AI, gaming, sound and security experiences to a smartphone. With more than 50 Snapdragon Elite Gaming features, Snapdragon 8 delivers ultra-smooth responsiveness and HDR scenes.

It also unveiled the Snapdragon G3x Gen 1 Gaming Platform for gamers to enjoy their favorite games on the go. The platform combines all the Snapdragon Elite Gaming Technologies to create a new category of gaming devices and brings superior performance to run all Android games, play content from cloud gaming libraries and stream games from home console or PC. It features the Qualcomm Adreno GPU to run games at an ultra-smooth 144 frames per second. Qualcomm FastConnect 6900 Mobile Connectivity with Wi-Fi 6 and 6E offers fast upload and download speeds. Such innovative products are likely to have translated into higher revenues in the quarter.

In the fiscal first quarter, Qualcomm inked an agreement with BMW Group to bring the latest advancements in driver assistance technologies and products of its Snapdragon Ride Platform to its next generation of Advanced Driver Assistance Systems (ADAS) and automated driving (AD) platforms. It also inked a deal to deploy its Snapdragon Automotive Cockpit Platform in the new PEUGEOT 308 vehicles. The new PEUGEOT 308 vehicles will benefit from crystal clear graphics, high-resolution and immersive 4K touchscreen displays integrated with Qualcomm’s Snapdragon Automotive Cockpit Platform. These are likely to get reflected in the upcoming results.

For the December quarter, the Zacks Consensus Estimate for revenues is pegged at $10,450 million, indicating growth of 26.9% from the year-ago quarter’s reported figure. The consensus estimate for adjusted earnings per share is pegged at $3.01, which suggests an increase of 38.7%.

Key Developments in Q1

During the quarter, Qualcomm inked a definitive agreement with SSW Partners to acquire Veoneer, Inc. in an all-stock deal worth $4.5 billion, or $37.00 per share. The transaction is likely to be completed in 2022, subject to mandatory regulatory approvals and other closing conditions. 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 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. It was born out of a collaborative agreement with Qualcomm and leveraged the chipmaker’s Snapdragon Ride SoC hardware to emerge as a leading ADAS solution provider in the auto industry. 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.

Earnings Whispers

Our proven model does not predict an earnings beat for Qualcomm for the fiscal first 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 0.00%, with both pegged at $3.01. 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:

Alphabet Inc. GOOGL is set to release quarterly numbers on Feb 1. It has an Earnings ESP of +2.11% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Earnings ESP for Cirrus Logic, Inc. CRUS is +1.48% and it carries a Zacks Rank of 2. The company is set to report quarterly numbers on Jan 31.

The Earnings ESP for Meta Platforms, Inc. FB is +2.52% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Feb 2.

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

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QUALCOMM Incorporated (QCOM) : Free Stock Analysis Report

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