Earnings season is upon us, and the Action Alerts PLUS team was impressed with results from semiconductor titan Qualcomm (QCOM) and equipment-rental company United Rentals (URI).
“Qualcomm knocked the cover off the March quarter earnings ball in a report that not only pointed to a stronger-than-expected smartphone market but also confirmed the expansion of mobile beyond smartphones,” the AAP team said.
Revenue soared 41% year-over-year to $11.16 billion, beating the $10.6 billion consensus forecast. Earnings per share also came in stronger than expected, at $3.21 versus $1.90 in the year-earlier quarter. Qualcomm also revised upward its guidance for the current quarter.
“The report suggests pronounced smartphone growth this year, and confirms the evolution to 5G is on path,” the AAP team said.
As for United Rentals, “the company crushed March quarter expectations, delivering earnings per share of $5.73 per share on revenue of $2.52 billion, up 22.7% year over year,” the AAP team said.
The momentum that United Rentals had as it entered 2022 has continued, with a tailwind for rental demand from construction and industrial markets, the company said. It boosted its 2022 revenue outlook.
Morningstar Likes Qualcomm, Too
Morningstar analyst Abhinav Davuluri saw marked strength in Qualcomm's earnings, numbers, too. The company is “benefiting from the ongoing ramp of 5G smartphones and broad-based chip demand,” he wrote in a commentary.
“Despite the ongoing chip shortage, the firm has secured sufficient supply to achieve significant growth via multisourcing initiatives.”
That includes the use of foundry partners, such as Taiwan Semiconductor (TSM) and Samsung Electronics SSNLF, as well as second-tier foundries like United Microelectronics (UMC) and GlobalFoundries (GFS) for products made on mature process nodes, Davuluri said.
Further, “chipset [Qualcomm CDMA Technology] sales were boosted by share gains at Android (GOOGL) smartphone original equipment manufacturers and greater 5G chip content,” he said.
He puts fair value at $163 for Qualcomm stock, compared with its recent quote of $140.
