Last update on 2024-06-07

Qualcomm (QCOM) - Piotroski F-Score Analysis for Year 2023 (Final Score: 5/9)

Qualcomm (QCOM) scored 5/9 on the Piotroski F-Score for 2023 reflecting moderate financial health based on profitability, liquidity, and leverage criteria.

Short Analysis - Piotroski Score: 5

We're running Qualcomm (QCOM) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

The Piotroski F-Score evaluates a company's financial strength on a scale of 0-9 based on nine criteria related to profitability, liquidity, and efficiency. Qualcomm (QCOM) scored a 5 in this analysis, showing mixed results. The company has displayed consistent profitability and positive cash flow from operations, both key indicators of financial health. Additionally, its current ratio has improved, indicating better liquidity. However, the company has increasing leverage, declining return on assets (ROA), falling gross margins, and a declining asset turnover ratio. These factors suggest a decrease in efficiency and a rise in financial risk.

Insights for Value Investors Seeking Stable Income

For investors, a Piotroski F-score of 5 indicates that Qualcomm has a moderate financial position. While the company's profitability and cash flow generation are strong, there are notable areas of concern, especially in terms of efficiency and financial risk. Potential investors should further scrutinize these concerns and weigh them against their risk tolerance. Overall, Qualcomm may warrant a closer look, but it's important to remain cautious and consider diversifying investments.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Qualcomm (QCOM)

Company has a positive net income?

Net income measures the profitability of a company over a specific period, and a positive net income indicates the company is profitable.

In 2023, Qualcomm (QCOM) recorded a net income of $7,232,000,000, which is indeed positive. This indicates that the company was profitable during this fiscal year. Evaluating the net income over the last 20 years, Qualcomm has shown a trend of profitability with a few exceptions, notably in 2018 where it recorded a net loss of approximately $4.864 billion. The net income fluctuated significantly over the years, with peaks in 2021 ($12.936 billion) and notable reductions in other periods. Nevertheless, the overall trend showcases Qualcomm's ability to generate net earnings positively in most of the years, thus earning 1 point under this criterion in the Piotroski Analysis.

Company has a positive cash flow?

Cash Flow from Operations (CFO) measures the cash a company generates from its normal business operations after deducting any operating expenses. It is an important indicator of a company's financial health.

For the fiscal year ended 2023, Qualcomm (QCOM) reported Cash Flow from Operations (CFO) of $11.299 billion, reflecting a positive cash flow status. This is crucial as it indicates Qualcomm's ability to generate sufficient cash to maintain and grow operations, invest in research and development, and meet its financial obligations. Historical CFO data over the past 20 years shows a steady and significant increase in operating cash flow, from $1.78 billion in 2003 to $11.299 billion in 2023. This upwards trend demonstrates Qualcomm's improving efficiency in converting sales into actual cash.

Return on Assets (ROA) are growing?

Change in ROA compares the company's return on assets from one year to another to evaluate profitability trends.

In 2023, Qualcomm's return on assets (ROA) is 0.1446, down from 0.2867 in 2022. This marks a significant decrease. The result implies that Qualcomm's ability to convert its assets into profits has deteriorated. It's crucial as it highlights declining efficiency and profitability, possibly due to increased costs or lower revenues.

Operating Cashflow are higher than Netincome?

This criterion examines if the company's operating cash flow is higher than its net income, indicating strong cash generation and accounting conservatism.

In 2023, Qualcomm's operating cash flow amounted to $11.299 billion, while its net income was $7.232 billion. Since the operating cash flow is significantly higher than the net income, it highlights Qualcomm's robust ability to generate cash from its operations relative to its reported earnings. This positive disparity points to conservative accounting practices and a strong underlying cash generation capability. Over the last 20 years, Qualcomm's operating cash flow has shown a consistent upward trend, peaking at $11.299 billion in 2023, while net income has also generally trended upwards, with some fluctuations. This criterion is met, so 1 point is awarded.

Liquidity of Qualcomm (QCOM)

Leverage is declining?

Change in leverage measures whether a company has decreased or increased its financial leverage compared to the prior year, which is critical for understanding financial risk.

The leverage ratio for Qualcomm (QCOM) has increased from 0.2762 in 2022 to 0.2838 in 2023. Therefore, they score 0 points for this criterion, indicating that financial risk has slightly increased. Over the last 20 years, Qualcomm's leverage has experienced significant fluctuations, particularly notable was the increase from virtually negligible ratios in the early years (e.g., 0 in 2000) to markedly higher values post-2015. This recent upward trend in leverage could suggest a growing reliance on debt financing for expansion or other operational needs.

Current Ratio is growing?

The current ratio is a measure of a company's ability to pay off its short-term liabilities with its short-term assets. An increase in the current ratio suggests improved liquidity, indicating a stronger ability to cover short-term obligations.

In comparing the Current Ratio of Qualcomm (QCOM) for the years 2022 and 2023, we observe an increase from 1.7465 to 2.3332. This trend is favorable as it indicates that Qualcomm has improved its liquidity position over the past year. Historically, Qualcomm’s Current Ratio peaked in 2004 at 8.0839 and has seen fluctuations since, dropping significantly in the years following but consistently remaining above the industry's median ratios until 2018. With the current ratio of 2.3332 in 2023, Qualcomm appears to be in a better position relative to its past few years, and this ratio is noticeably compliant with industry standards, which is an encouraging indicator of financial health. Addition of this improvement gives Qualcomm a point for this criterion in the Piotroski analysis.

Number of shares not diluted?

Outstanding shares refer to a company's stock currently held by all its shareholders. It is crucial to consider as high outstanding shares can dilute earnings per share.

The outstanding shares for Qualcomm (QCOM) increased from 1,123,000,000 in 2022 to 1,117,000,000 in 2023. This results in an increment rather than a decrement, thus no point for this criterion. Over the last two decades, QCOM's outstanding shares have generally trended downwards after peaking around 2012. Companies sometimes reduce outstanding shares to increase earnings per share and add shareholder value. Despite the slight increase from 2022 to 2023, the longer trajectory is favorable.

Operating of Qualcomm (QCOM)

Cross Margin is growing?

The change in gross margin is a good indicator of the company's pricing efficiency, cost management, and overall financial health.

The gross margin for Qualcomm (QCOM) in 2023 was 0.557, compared to 0.5784 in 2022. This reflects a decrease in gross margin. The 0.5784 in 2022 was already below the industry's median gross margin of 0.4919, and 0.557 in 2023 is further below this median threshold. Such a decline suggests potential challenges in maintaining pricing strategies or increased costs, both detrimental factors within the Piotroski F-score. Therefore, Qualcomm would earn 0 points for this criterion.

Asset Turnover Ratio is growing?

Asset Turnover is a key indicator of how efficiently a company uses its assets to generate sales. It's important for understanding operational efficiency.

In 2022, Qualcomm achieved an Asset Turnover of 0.9795. However, the ratio declined to 0.716 in 2023. This nearly 27% drop indicates a significant decrease in how effectively Qualcomm is utilizing its assets to generate revenue. Historically, Qualcomm's Asset Turnover ratio has experienced fluctuations, but this recent decline marks a notable drop from the previous year's performance. In comparison to past years, the ratio now hovers around levels seen in early to mid-2010s. Such a decrease suggests that either the sales have declined or the company's asset base has grown disproportionately compared to its sales. This is a negative trend for this specific Piotroski criterion, thereby scoring 0 points.