Here's Why Qualcomm (QCOM) Fell More Than Broader Market

In the latest close session, Qualcomm (QCOM) was down 2.21% at $131.15. This move lagged the S&P 500's daily loss of 1.52%. Elsewhere, the Dow lost 1.56%, while the tech-heavy Nasdaq lost 1.78%.

Prior to today's trading, shares of the chipmaker had lost 4.91% lagged the Computer and Technology sector's loss of 1.66% and the S&P 500's loss of 2.25%.

The investment community will be closely monitoring the performance of Qualcomm in its forthcoming earnings report. The company is expected to report EPS of $2.57, down 9.82% from the prior-year quarter. Simultaneously, our latest consensus estimate expects the revenue to be $10.58 billion, showing a 2.39% drop compared to the year-ago quarter.

Looking at the full year, the Zacks Consensus Estimates suggest analysts are expecting earnings of $11.17 per share and revenue of $43.88 billion. These totals would mark changes of -7.15% and -0.59%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for Qualcomm. These revisions help to show the ever-changing nature of near-term business trends. As a result, upbeat changes in estimates indicate analysts' favorable outlook on the business health and profitability.

Our research reveals that these estimate alterations are directly linked with the stock price performance in the near future. To exploit this, we've formed the Zacks Rank, a quantitative model that includes these estimate changes and presents a viable rating system.

The Zacks Rank system, which varies between #1 (Strong Buy) and #5 (Strong Sell), carries an impressive track record of exceeding expectations, confirmed by external audits, with stocks at #1 delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has shifted 0.89% downward. Qualcomm currently has a Zacks Rank of #5 (Strong Sell).

In terms of valuation, Qualcomm is presently being traded at a Forward P/E ratio of 12.01. Its industry sports an average Forward P/E of 36.65, so one might conclude that Qualcomm is trading at a discount comparatively.

Meanwhile, QCOM's PEG ratio is currently 5.11. The PEG ratio bears resemblance to the frequently used P/E ratio, but this parameter also includes the company's expected earnings growth trajectory. The average PEG ratio for the Electronics - Semiconductors industry stood at 2.06 at the close of the market yesterday.

The Electronics - Semiconductors industry is part of the Computer and Technology sector. At present, this industry carries a Zacks Industry Rank of 77, placing it within the top 32% of over 250 industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.

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This article originally published on Zacks Investment Research (zacks.com).

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