After renewing their partnership earlier in the year, Wall Street will certainly be scoping Qualcomm (QCOM) and Apple’s (AAPL) quarterly reports this week.
Providing modem chips for Apple products, Qualcomm is set to report its fiscal fourth quarter results on Wednesday, November 1 with Apple scheduled to issue its fiscal Q4 report on Thursday, November 2.
Apple’s stock performance has been very impressive this year soaring +31% to outperform the broader indexes while Qualcomm shares have lagged and are down -1% YTD. With that being said, investors will certainly be hoping these iconic tech partners can post strong quarterly results that give both of their stocks a boost.
Image Source: Zacks Investment Research
Qualcomm Q4 Preview
Slowing growth centered around a stalling recovery in China amid stiffer regulations from the Chinese government has derailed Qualcomm’s stock in 2023.
However, at current levels, Qualcomm’s valuation has become attractive despite Q4 earnings projected at $1.92 a share compared to $3.31 per share a year ago. Fourth-quarter sales are forecasted at $8.55 billion versus $11.40 billion in Q4 2022.
The Zacks ESP (Expected Surprise Prediction) does indicate Qualcomm could top earnings expectations with the Most Accurate Estimate having Q4 EPS at $2.02 per share and 5% above the Zacks Consensus. Plus, Qualcomm has surpassed earnings expectations in three of its last four quarterly reports most recently topping the Zacks Consensus for Q3 EPS by 3%.
Image Source: Zacks Investment Research
Apple Q4 Preview
Apple has faced regulation scrutiny in China as well although this is expected to have a milder impact on its top and bottom lines. To that point, Apple’s Q4 earnings are forecasted to be up 8% year over year at $1.39 per share. This is despite Q4 sales projected to dip -1% to $88.79 billion.
More intriguing, Apple’s Greater China segment sales are anticipated at $17.34 billion which would be a 12% increase from Q4 2022. Apple has also surpassed earnings expectations in three of its last four quarterly reports most recently beating the Zacks Consensus for Q3 EPS by 6%.
Image Source: Zacks Investment Research
Outlook & Current Valuations
Overall, Qualcomm’s earnings are forecasted to drop -33% in fiscal 2023 at $8.32 per share compared to $12.53 a share in 2022. Fiscal 2024 earnings are expected to rebound and rise 9% to $9.11 per share. On the top line, sales are projected to dip -19% this year but stabilize and rise 3% in FY24 to $36.94 billion.
Notably, Qualcomm’s stock trades at 11.8X forward earnings which is nicely below the S&P 500’s 19.5X. This is also 67% below its decade-long high of 36.9X and a 28% discount to the median of 16.5X.
Image Source: Zacks Investment Research
Turning to Apple, annual earnings are now expected to dip -1% in FY23 but rebound and rise 8% in FY24 to $6.54 per share. Total sales are projected to be down -3% this year but stabilize and rise 5% in FY24 to $402.85 billion.
Apple’s stock currently trades at a 26X forward earnings multiple commanding a premium to the benchmark but trading nicely below its decade-long high of 38.6X while being modestly above the median of 16.7X.
Image Source: Zacks Investment Research
Takeaway
Rounding out their fiscal year 2023, Qualcomm and Apple stock both land a Zacks Rank #3 (Hold). With FY24 expected to be a stronger year for both tech giants, positive Q4 results could certainly lead to nice momentum in their stocks especially if accompanied by better-than-expected guidance.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
QUALCOMM Incorporated (QCOM) : Free Stock Analysis Report
Apple Inc. (AAPL) : Free Stock Analysis Report