Qualcomm (NASDAQ:QCOM) is scheduled to report its earnings on April 30, 2025. Revenues are projected to increase by 13% year-over-year to $10.6 billion, according to consensus estimates, while earnings are anticipated to be $2.81 per share. This growth is expected to be fueled by increasing demand for the company’s chipsets, particularly from high-end Android devices manufactured by Chinese vendors. Although earnings are likely to be robust, investors will be paying close attention to Qualcomm’s guidance, especially in light of the ongoing trade war with China and other significant trading partners. Qualcomm’s fabless business model, which relies on production in Asia and its considerable exposure to China, which represented nearly 46% of total revenue in the last fiscal year, poses risks for the company.
Qualcomm has a current market capitalization of $156 billion. Revenue for the past twelve months was $41 billion, and the company was operationally profitable with approximately $11 billion in operating profits. That said, if you are looking for upside with lower volatility compared to individual stocks, the Trefis High-Quality portfolio offers an alternative, having outperformed the S&P 500 and delivered returns exceeding 91% since its inception.
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Qualcomm’s Historical Odds of Positive Post-Earnings Returns
Here are some insights on one-day (1D) post-earnings returns:
- There have been 20 earnings data points recorded over the past five years, with 8 positive and 12 negative one-day (1D) returns observed. In summary, positive 1D returns were realized approximately 40% of the time.
- However, this percentage drops to 25% when we examine data from the last 3 years instead of 5.
- The median of the 8 positive returns = 9.7%, and the median of the 12 negative returns = -4.9%
Additional information regarding observed 5-Day (5D) and 21-Day (21D) returns post earnings is summarized along with the statistics in the table below.
Correlation Between 1D, 5D, and 21D Historical Returns
A relatively less risky strategy (though not beneficial if the correlation is low) is to analyze the correlation between short-term and medium-term returns following earnings, identify a pair that has the highest correlation, and execute the appropriate trade. For instance, if 1D and 5D exhibit the highest correlation, a trader may choose to position themselves “long” for the next 5 days if the 1D post-earnings return is positive. Below is some correlation data based on both 5-year and 3-year (more recent) history. Note that the correlation 1D_5D refers to the relationship between 1D post-earnings returns and the following 5D returns.
Learn more about Trefis RV strategy that has outperformed its all-cap stocks benchmark (a combination of all 3, the S&P 500, S&P mid-cap, and Russell 2000), producing strong returns for investors. Additionally, if you are seeking upside with a smoother experience than an individual stock like Qualcomm, consider the High Quality portfolio, which has surpassed the S&P and achieved >91% returns since its inception.
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