It certainly seems that all hope is lost for Qualcomm (QCOM). Last week, QCOM stock fell 12% to cap off cumulative losses of 30% in 2015. The reason was poor earnings that showcased a 28% decline in adjusted earnings, bleak guidance, and changes to how QCOM presents financial data. Qualcomm stock is surrounded by uncertainty, and while that doesn’t look good, there are still reasons that QCOM is a good long-term investment.
QCOM Is Too Cheap to Ignore - Right now, the S&P 500 is trading at 18 times next year’s expected earnings. If we remove QCOM’s $31 billion cash pile, then QCOM stock trades at just 6.6 times FY2016 EPS if the company is successful in earning $4.88 per share next year. That represents a deep discount to the S&P 500 and the 22.5 times multiple found in the communications equipment industry. Given that QCOM’s valuation is so cheap, coupled with its big yield and a willingness to hike its dividend, Qualcomm stock looks like a good investment opportunity.
Source: InvestorPlace
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