5G has become the buzzword in the digital era. The rising demand for ultra-reliable and low-latency data networks for enhanced connectivity is driving the growth of the 5G network. Moreover, with most organizations sticking to remote working, the industry is expected to thrive. Kirti Gupta, VP of economic strategy at Qualcomm Inc., stated that 5G is, “the fundamental infrastructure driving the future connected world.”
According to Ericsson’s latest Mobility Report, 5G is expected to account for nearly half of global mobile subscriptions by 2027. Moreover, the global 5G services market is expected to grow at a CAGR of 46.2% to reach $664.75 billion by 2028. Private players are investing significantly in the deployment and commercialization of 5G solutions. In addition, President Biden’s infrastructure bill, which was signed into law in November 2021, allocates $65 billion to improve broadband internet accessibility and affordability across the lower-income groups.
Qualcomm Inc. (QCOM)
QCOM offers foundational technologies for the wireless industry worldwide. It is engaged in the expansion of 3G/4G/5G technologies. It operates through three segments: Qualcomm CDMA Technologies (QCT); Qualcomm Technology Licensing (QTL); and Qualcomm Strategic Initiatives (QSI).
In November 2021, QCOM collaborated with the BMW Group to bring the latest advancements in driver assistance technologies and products of its Snapdragon Ride™ Platform to BMW’s next generation of advanced driver-assistance systems (ADAS) and automated driving (AD) platforms. “Our announcement with BMW today is the onset of a new era in automotive where two technology leaders have come together to design and develop a key element of Snapdragon® Digital Chassis for the next generation automobile,” said Cristiano Amon, president, and CEO of QCOM.
On January 18, QCOM declared a quarterly dividend of $0.68 per common share, payable on March 24, 2022, to stockholders of record at the close of business on March 3, 2022.
QCOM’s non-GAAP revenues increased 43.4% year-over-year to $9.32 billion in the fourth quarter ended September 26. Its non-GAAP net income improved 74.7% year-over-year to $2.92 billion, while its non-GAAP EBT grew 76% from the year-ago value to $3.28 billion. Its non-GAAP EPS increased 75.9% from the prior-year quarter to $2.55.
The consensus revenue estimate of $10.43 billion for the fiscal first quarter ending December 2021 indicates an increase of 26.8% year-over-year. Analysts expect QCOM’s EPS to come in at $3.00 for the same quarter, reflecting a rise of 38.4% year-over-year. Moreover, the company topped EPS estimates in each of the trailing four quarters, which is impressive.
The stock has declined 5.8% over the past month and 11.8% over the past five days to close its last trading session at $166.50. The stock is currently trading 14% below its 52-week high of $193.58.
QCOM’s POWR Ratings reflect this promising outlook. The company has an overall rating of B, which translates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each other weighted to an optimal degree.
QCOM is also rated B in Value, Sentiment, and Quality. Within the A-rated Semiconductor & Wireless Chip industry, it is ranked #14 of 100 stocks.
In addition to the POWR Ratings grades highlighted, you can see the QCOM’s Growth, Momentum, Stability ratings here.
Nokia Corporation (NOK)
Headquartered in Espoo, Finland, NOK is a leading mobile and fixed network solutions provider worldwide. The company operates through four segments: Mobile Networks; Network Infrastructure; Cloud and Network Services; and Nokia Technologies.
This month, NOK announced its partnership with Tele2 to deploy 5G RAN in Estonia, Latvia, and Lithuania in a long-term deal. This deal marks 25 years of continuous cooperation with Tele2 in the Baltic region and should enable NOK to strengthen its footing in the fast-growing 5G space.
In December 2021, NOK announced that it would provide its O-RAN fronthaul multi-vendor solution to NTT DOCOMO, Inc.’s (DCMYY) 5G network. This agreement demonstrates NOK’s expertise in open network systems and should generate significant revenues.
NOK’s net sales increased 1.9% year-over-year to €5.40 billion ($6.12 billion) in the fiscal third quarter. Its operating profit stood at €502 million ($569.19 million), up 43.4% from the prior-year quarter, while profit for the period increased 78.2% year-over-year to €351 million ($397.98 million). Also, its EPS increased 100% from its year-ago value to €0.06.
NOK’s EPS is expected to come in at $0.40 for the fiscal period ending December 2021, indicating a rise of 29.8% year-over-year. Moreover, NOK has surpassed the consensus EPS estimates in each of the trailing four quarters.
NOK shares have slumped 4.7% over the past one month and 5.1% over the past five days to close its last trading session at $5.63. The stock is currently trading 42.5% below its 52-week high of $9.79.
NOK’s POWR Ratings reflect its solid fundamentals. The company has an overall rating of B, which translates to Buy in our proprietary rating system. NOK is rated a B in Value and Sentiment. Within the Technology-Communication/Networking industry, it is ranked #11 of 55 stocks. Click here to see the NOK’s growth, Momentum, Stability, and quality grades.
Avnet, Inc. (AVT)
AVT is a technology solution company that markets, sells, and distributes electronic components from manufacturers, including semiconductors, interconnect, passive and electromechanical components, and other integrated and embedded components. The company operates through two segments, Electronic Components, and Farnell.
On November 9, AVT announced its collaboration with Digital Realty (NYSE: DLR), the largest global provider of cloud- and carrier-neutral data centers, to develop high-performance, cloud-based universal video streaming solutions. “With our technology partners and tools, Avnet Integrated is enabling our customers to more effectively evaluate and deploy solutions globally,” said Alp Sezen, head of the strategy, Avnet Integrated.
AVT’s non-GAAP sales increased 18.2% year-over-year to $5.58 billion in the first quarter ended October 2. Its non-GAAP operating income increased 174.6% year-over-year to $178.75 million, while its gross profit grew 27.8% from the year-ago value to $659.69 million. Its non-GAAP EPS increased 238.9% from its year-ago value to $1.22.
Analysts expect the company’s revenue to increase 19.7% year-over-year to $5.59 billion in the fiscal second quarter ended December 2021. The consensus EPS estimate of $1.27 indicates a rise of 165% year-over-year in the same quarter. Also, AVT beat Street EPS estimates in each of the trailing four quarters.
Over the past five days, the stock has declined 4.7% and 1.5% intraday to close its last trading session at $40.19. The stock is currently trading 11.5% below its 52-week high of $45.43.
It’s no surprise AVT has an overall rating of B, which translates to Buy in our proprietary rating system. The stock is rated an A in Growth and a B in Value. It is ranked #2 among the 45 stocks in the Technology-Electronics industry.
In addition to the POWR Ratings grades highlighted, you can see the AVT’s Momentum, Stability, Sentiment, Quality ratings here.
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QCOM shares were trading at $164.93 per share on Friday afternoon, down $1.57 (-0.94%). Year-to-date, QCOM has declined -9.81%, versus a -7.79% rise in the benchmark S&P 500 index during the same period.
About the Author: Subhasree Kar
Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics. More...
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