DCF Studio

    QCOM · NMS · Technology

    QUALCOMM Incorporated

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 95.76

    Market price

    USD 177.72

    Implied upside

    -46.1%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    Value Per Share

    Perpetuity growth
    USD 95.76-46.1%
    Exit multiple
    USD 145.23-18.3%
    Market price
    USD 177.72

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn6bn12bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 44.3bnUSD 44.3bnUSD 44.4bnUSD 44.4bnUSD 44.4bn+0.1%
    EBITUSD 12.7bnUSD 12.7bnUSD 12.7bnUSD 12.7bnUSD 12.7bn+0.1%
    NOPATUSD 11.7bnUSD 11.7bnUSD 11.7bnUSD 11.7bnUSD 11.7bn+0.1%
    Add depreciation & amortisationUSD 1.9bnUSD 1.9bnUSD 1.9bnUSD 1.9bnUSD 1.9bn+0.1%
    Less capital expenditureUSD -1.6bnUSD -1.6bnUSD -1.6bnUSD -1.6bnUSD -1.6bn+0.1%
    Less increase in working capitalUSD 2.2mUSD 2.2mUSD 2.2mUSD 2.2mUSD 2.2m-0.1%
    Free cashflow to firmUSD 12.0bnUSD 12.0bnUSD 12.0bnUSD 12.0bnUSD 12.0bn+0.1%
    Discount factor0.94330.83930.74670.66440.5911-
    Present valueUSD 11.3bnUSD 10.0bnUSD 8.9bnUSD 8.0bnUSD 7.1bn-11.0%
    Present Value Of The ForecastUSD 45.3bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta1.455Reported 1.679, pulled toward 1.0 (Blume)
    Cost of equity13.00%Risk-free + beta x equity risk premium
    Cost of debt5.00%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 189.8bn92.8% of capital
    Total debtUSD 14.8bn7.2% of capital, book value as a proxy
    Tax rate7.8%Effective, capped at statutory
    WACC12.39%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 95.76

    59% of EV

    Forecast FCFF, final year
    USD 12.0bn
    Capex at depreciation, working capital in reinvestment
    USD 11.7bn
    Less reinvestment at g/ROIC (9.1% of NOPAT)
    USD -1.1bn
    Capitalised
    USD 10.6bn
    ROIC (reported)
    27.4%
    Terminal value, undiscounted
    USD 110.2bn
    Terminal value, discounted
    USD 65.2bn
    Enterprise value
    USD 110.5bn
    Less net debt
    USD 4.7bn
    Equity value
    USD 105.8bn

    Exit at 13.9x EBITDA

    Value per shareUSD 145.23

    73% of EV

    Terminal value, undiscounted
    USD 202.7bn
    Terminal value, discounted
    USD 119.8bn
    Enterprise value
    USD 165.1bn
    Less net debt
    USD 4.7bn
    Equity value
    USD 160.5bn

    Spread between methods: 41%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    10.39%111.77115.01118.64122.76127.45
    11.39%100.87103.27105.93108.89112.22
    12.39%91.9593.7795.7697.95100.38
    13.39%84.5385.9387.4489.0990.90
    14.39%78.2479.3380.5081.7783.14

    Outlined: this model. Green text: above today's price of 177.72. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year0.1%15.0%+14.9pp
    EBIT margin28.6%52.2%+23.7pp
    Discount rate12.4%7.7%-4.7pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.