Comparing Qualcomm’s Price and Valuation Multiples



Qualcomm’s valuation

Qualcomm’s (QCOM) book value per share in 2016 was ~$21.20 and its expected book value per share was ~$16.20 in 2017. Also, its price-to-sales ratio was ~3.6x in 2016 and its estimated price-to-sales ratio was ~3.55x in 2017. Qualcomm stock is trading at a price-to-book value of ~3.3x. In comparison, Intel’s (INTC), Advanced Micro Devices’ (AMD), and Micron Technology’s (MU) book values per share are ~$14.74, $0.63, and ~$17.10, respectively.

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Looking at Qualcomm’s cash flow metrics

Qualcomm has cash on hand of $35.4 billion. Its price-to-cash flow and price-to-free-cash-flow ratios are 15.7x and 81.3x, respectively. In the last 12 months, the company’s EV[1.enterprise value]-to-cash-flow ratio has been 13.2x, and its EV-to-free-cash-flow ratio has been 15.6x.

Examining Qualcomm’s EBITDA numbers

Qualcomm’s EBITDA (earnings before interest, tax, depreciation, and amortization) grew 28% to $6.2 billion in 2017. Qualcomm stock is changing hands at a price-to-EBITDA ratio of 12.9x. Peers Intel, Advanced Micro Devices, and Micron Technology are trading at price-to-EBITDA ratios of 8.7x, 36.5x, and 4.1x, respectively.

Qualcomm’s debt levels

Qualcomm is carrying a total debt of $22.8 billion, arrived at by adding its short-term debt of $3.5 billion to its long-term debt of $19.4 billion. Considering that the company has a total capital of $46.8 billion, its total-debt-to-total-capital ratio is 42%. The company has debt-to-assets, debt-to-equity, and debt-to-EBITDA ratios of 0.36x, 95.5x, and 3.7x, respectively.


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