QUALCOMM Incorporated (NASDAQ:QCOM) is set to report FQ2 2014 earnings after the market closes on Wednesday, April 23rd. QUALCOMM is an American global semiconductor company that produces and designs products and services for telecommunications devices including high end smart phones. Smartphones have been booming lately and QCOM stock is up 10% since the start of 2014 alone, which is especially impressive considering the broad sell off in tech stocks that the market has seen. This quarter the market has sky high expectations for QUALCOMM to live up to. Here’s what investors are expecting from QUALCOMM on Wednesday.
The current Wall Street consensus expectation is for QUALCOMM to report $1.22 EPS and $ 6.496B revenue while the current Estimize.com consensus from 40 Buy Side and Independent contributing analysts is $1.25 EPS and $6.575B in revenue. This quarter the buy-side as represented by the Estimize.com community is expecting QUALCOMM to beat the Wall Street consensus on both EPS and revenue by a considerable margin.
Over the previous 6 quarters the consensus from Estimize.com has been more accurate than Wall Street in forecasting QUALCOMM’s EPS and revenue 3 and 4 times respectively. By tapping into a wider range of contributors including hedge-fund analysts, asset managers, independent research shops, students, and non professional investors Estimize has created a data set that is more accurate than Wall Street up to 69.5% of the time, but more importantly it does a better job of representing the market’s actual expectations. It has been confirmed by Deutsche Bank Quant. Research and an independent academic study from Rice University that stock prices tend to react with a more strongly associated degree to the expectation benchmark from Estimize than from the Wall Street consensus.
The magnitude of the difference between the Wall Street and Estimize consensus numbers often identifies opportunities to take advantage of expectations that may not have been priced into the market. In this case we are seeing an average differential between the two groups’ expectations.
The distribution of estimates published by analysts on the Estimize.com platform range from $1.19 to $1.35 EPS and from $6.397B to $6.851B in revenues. This quarter we’re seeing an average sized distribution of estimates on QUALCOMM.
The size of the distribution of estimates relative to previous quarters often signals whether or not the market is confident that it has priced in the expected earnings already. A wider distribution of estimates signaling less agreement in the market, which could mean greater volatility post earnings.
Over the past 4 months the Wall Street EPS forecast fell from $1.28 to $1.22 while the Estimize consensus fell from $1.28 to $1.25. Meanwhile the Wall Street revenue consensus plummeted from $6.751B to $6.496B while the Estimize consensus gradually declined from $6.696B to $6.575B. Timeliness is correlated with accuracy and downward analyst revisions going into an earnings report are often a bearish indicator.
The analyst with the highest estimate confidence rating this quarter is princebhojwani who projects $1.25 EPS and $6.550B in revenue. princebhojwani is ranked 45th overall among over 4,150 contributing analysts. Over the past 2 years princebhojwani has been more accurate than Wall Street in forecasting EPS and revenue 58% and 50% of the time respectively throughout 173 estimates. Estimate confidence ratings are calculated through algorithms developed by deep quantitative research which looks at correlations between analyst track records and tendencies as they relate to future accuracy. In this case princebhojwani is expecting QUALCOMM to report in-line with the Estimize community on EPS but come up slightly short of the community’s expectations on revenue.
This quarter the Estimize community expects QUALCOMM to beat the Wall Street expectations by 3c per share in EPS and $79 million in revenue. QUALCOMM stock has been red hot and this quarter and the bar has been set high for the semiconductor company to live up to.