Critical Survey: QUALCOMM (QCOM) versus Emulex (ELX)

QUALCOMM (NASDAQ: QCOM) and Emulex (NYSE:ELX) are both computer and technology companies, but which is the better stock? We will contrast the two companies based on the strength of their dividends, analyst recommendations, institutional ownership, risk, valuation, earnings and profitability.

Insider and Institutional Ownership

77.0% of QUALCOMM shares are owned by institutional investors. 0.2% of QUALCOMM shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for QUALCOMM and Emulex, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
QUALCOMM 1 17 10 0 2.32
Emulex 0 0 0 0 N/A

QUALCOMM presently has a consensus price target of $64.27, suggesting a potential upside of 27.09%. Given QUALCOMM’s higher probable upside, research analysts plainly believe QUALCOMM is more favorable than Emulex.

Dividends

QUALCOMM pays an annual dividend of $2.28 per share and has a dividend yield of 4.5%. Emulex does not pay a dividend. QUALCOMM pays out 87.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Emulex has raised its dividend for 6 consecutive years.

Profitability

This table compares QUALCOMM and Emulex’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
QUALCOMM 17.26% 19.64% 10.95%
Emulex -61.34% -54.64% -34.34%

Earnings & Valuation

This table compares QUALCOMM and Emulex’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
QUALCOMM $22.57 billion 3.31 $7.15 billion $2.61 19.38
Emulex N/A N/A N/A N/A N/A

QUALCOMM has higher revenue and earnings than Emulex.

Summary

QUALCOMM beats Emulex on 9 of the 11 factors compared between the two stocks.

About QUALCOMM

QUALCOMM Incorporated is engaged in the development and commercialization of a digital communication technology called code division multiple access (CDMA). The Company is engaged in the development and commercialization of the orthogonal frequency division multiple access (OFDMA) family of technologies, including long-term evolution (LTE), which is an Orthogonal Frequency Division Multiplexing (OFDM)-based standard that uses OFDMA and single-carrier Frequency Division Multiple Access (FDMA), for cellular wireless communication applications. The Company’s segments include QCT (Qualcomm CDMA Technologies), QTL (Qualcomm Technology Licensing) and QSI (Qualcomm Strategic Initiatives). The Company also develops and commercializes a range of other technologies used in handsets and tablets that contribute to end user demand. The Company’s products principally consist of integrated circuits (chips or chipsets) and system software used in mobile devices and in wireless networks.

About Emulex

Emulex Corporation (Emulex) is a provider of network connectivity, monitoring and management products. It provides solutions for networks that support enterprise, cloud, government and telecommunications sectors. The Company’s portfolio of input/output (I/O) connectivity offerings, including the line of Ethernet and Fiber Channel-based connectivity products, has been designed into server and storage solutions. Its monitoring and management solutions include its network visibility and recording products. The Company’s network connectivity, monitoring and management solutions are offered through two business segments: Connectivity Segment and the Visibility Segment. The Connectivity Segment comprises the Company’s Emulex products, and network connectivity products (NCP) and storage connectivity and other products (SCOP). Its Visibility Segment comprises its Network Visibility Products (NVP).

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