Contrasting NTT Docomo (DCM) and QUALCOMM (QCOM)

NTT Docomo (NYSE: DCM) and QUALCOMM (NASDAQ:QCOM) are both large-cap computer and technology companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, risk, institutional ownership, valuation, analyst recommendations, dividends and profitability.

Dividends

NTT Docomo pays an annual dividend of $0.39 per share and has a dividend yield of 1.5%. QUALCOMM pays an annual dividend of $2.48 per share and has a dividend yield of 4.2%. NTT Docomo pays out 24.1% of its earnings in the form of a dividend. QUALCOMM pays out 65.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. QUALCOMM has increased its dividend for 7 consecutive years. QUALCOMM is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

0.6% of NTT Docomo shares are owned by institutional investors. Comparatively, 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 endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Profitability

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

Net Margins Return on Equity Return on Assets
NTT Docomo 15.25% 12.38% 9.34%
QUALCOMM -20.16% 16.48% 7.00%

Valuation & Earnings

This table compares NTT Docomo and QUALCOMM’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
NTT Docomo $42.41 billion 2.24 $6.07 billion $1.62 15.80
QUALCOMM $22.29 billion 3.96 $2.47 billion $3.78 15.73

NTT Docomo has higher revenue and earnings than QUALCOMM. QUALCOMM is trading at a lower price-to-earnings ratio than NTT Docomo, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of current ratings for NTT Docomo and QUALCOMM, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NTT Docomo 1 2 0 0 1.67
QUALCOMM 1 13 9 0 2.35

QUALCOMM has a consensus target price of $63.22, suggesting a potential upside of 6.33%. Given QUALCOMM’s stronger consensus rating and higher probable upside, analysts clearly believe QUALCOMM is more favorable than NTT Docomo.

Risk and Volatility

NTT Docomo has a beta of 0.1, meaning that its share price is 90% less volatile than the S&P 500. Comparatively, QUALCOMM has a beta of 1.5, meaning that its share price is 50% more volatile than the S&P 500.

Summary

QUALCOMM beats NTT Docomo on 11 of the 17 factors compared between the two stocks.

NTT Docomo Company Profile

NTT DOCOMO, INC. (DOCOMO) is a mobile telecommunications carrier. The Company operates through three segments: telecommunications business, smart life business and other businesses. The telecommunications business segment includes mobile phone services (long-term evolution (LTE) (Xi) services and freedom of mobile multimedia access (FOMA) services), optical-fiber broadband service, satellite mobile communications services, international services and equipment sales related to these services. The smart life business segment includes video and music distribution, electronic books and other services offered through its dmarket portal, as well as finance/payment services, shopping services and various other services to support the Company’s customers’ daily lives. Its other businesses segment primarily includes Mobile Device Protection Service, as well as the development, sale and maintenance of information technology (IT) systems.

QUALCOMM Company Profile

QUALCOMM Incorporated designs, develops, manufactures, and markets digital communication products worldwide. It operates through three segments: Qualcomm CDMA Technologies (QCT); Qualcomm Technology Licensing (QTL); and Qualcomm Strategic Initiatives (QSI). The QCT segment develops and supplies integrated circuits and system software based on code division multiple access (CDMA), orthogonal frequency division multiple access, and other technologies for use in wireless voice and data communications, networking, application processing, multimedia, and global positioning system products. The QTL segment grants licenses or provides rights to use portions of its intellectual property portfolio, which include various patent rights useful in the manufacture and sale of wireless products comprising products implementing CDMA2000, wideband CDMA, CDMA time division duplex, and/or long term evolution standards and their derivatives. The QSI segment invests in early-stage companies in various industries, including automotive, Internet of things, mobile, data center, and healthcare for supporting the design and introduction of new products and services for voice and data communications, and new industry segments. The company also provides products and services for mobile health; products designed for the implementation of small cells; development, and other services and related products to the United States government agencies and their contractors; and software products, and content and push-to-talk enablement services to wireless operators. In addition, it licenses chipset technology, and products and services for use in data centers. QUALCOMM Incorporated was founded in 1985 and is headquartered in San Diego, California.

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