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Will Soft Revenues Impact Qualcomm's (QCOM) Q1 Earnings?

Qualcomm Incorporated QCOM is set to report first-quarter fiscal 2023 results on Feb 2, after the closing bell. In the last reported quarter, the company delivered an earnings surprise of 0.32%. It pulled off a trailing four-quarter earnings surprise of 5.36%, on average.

QCOM, one of world’s leading digital wireless telecom products and service provider, is expected to have recorded lower year-over-year revenues due to falling demand for its smartphone chips amid global uncertainty.

Factors at Play

Qualcomm is concentrating on creating autonomous driving technologies to diversify its commercial portfolio. Its Snapdragon digital chassis offer a comprehensive set of connected automotive platforms for telematics and connectivity, computing, and driver assistance and autonomy. In addition to immersive experience, it offers augmented reality-based navigation systems, engine noise suppression capabilities and in-cabin monitoring. Business diversity could benefit its first-quarter profitability and put it in a better position to withstand macroeconomic challenges.

Qualcomm anticipates a fall in demand for its handset chips as the December quarter is likely to have witnesses the worst smartphone shipment volume in the last 10 years, down 17% from the prior-year quarter’s levels. High inventory combined with low demand situations in post-pandemic period forced vendors to reduce shipments drastically. The company had decreased its outlook for smartphone shipments from a mid-single-digit fall to a low-double-digit percentage decline, signaling a downtrend in the handset market.

Rising geopolitical tension in Europe and Asia is fuelling global instability and adding to the macroeconomic challenges. These elements are probably going to hurt the company’s first-quarter revenues.

For the December quarter, the Zacks Consensus Estimate for revenues is pegged at $9,700 million, indicating a decline of 9.3% from the year-ago quarter’s reported figure. Adjusted earnings per share are pegged at $2.35, suggesting a contraction from $3.23 recorded in the year-earlier quarter.

Earnings Whispers

Our proven model does not predict an earnings beat for Qualcomm for the fiscal first quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -1.92%, with the former pegged at $2.30 and the latter at $2.35. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

QUALCOMM Incorporated Price and EPS Surprise


QUALCOMM Incorporated Price and EPS Surprise
QUALCOMM Incorporated Price and EPS Surprise

QUALCOMM Incorporated price-eps-surprise | QUALCOMM Incorporated Quote



Zacks Rank: Qualcomm has a Zacks Rank #4 (Sell).

Stocks to Consider

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:

Telephone and Data Systems, Inc.  TDS is set to release quarterly numbers on Feb 16. It has an Earnings ESP of +2.63% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Earnings ESP for Arista Networks, Inc. ANET is +0.14% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on Feb 13.

The Earnings ESP for Cambium Networks Corporation CMBM is +9.27% and it carries a Zacks Rank of 1. The company is scheduled to report quarterly numbers on Feb 16.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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

Telephone and Data Systems, Inc. (TDS) : Free Stock Analysis Report

Arista Networks, Inc. (ANET) : Free Stock Analysis Report

Cambium Networks Corporation (CMBM) : Free Stock Analysis Report

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