Qualcomm (NASDAQ:QCOM – Get Free Report) and Broadcom (NASDAQ:AVGO – Get Free Report) are both large-cap computer and technology companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, dividends, risk, earnings, profitability, analyst recommendations and valuation.
Profitability
This table compares Qualcomm and Broadcom’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Qualcomm | 22.31% | 42.11% | 19.33% |
| Broadcom | 38.85% | 41.61% | 19.55% |
Dividends
Qualcomm pays an annual dividend of $3.68 per share and has a dividend yield of 1.7%. Broadcom pays an annual dividend of $2.60 per share and has a dividend yield of 0.7%. Qualcomm pays out 40.0% of its earnings in the form of a dividend. Broadcom pays out 43.3% 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 raised its dividend for 23 consecutive years and Broadcom has raised its dividend for 15 consecutive years. Qualcomm is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Insider & Institutional Ownership
Analyst Ratings
This is a breakdown of current recommendations for Qualcomm and Broadcom, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Qualcomm | 3 | 16 | 15 | 0 | 2.35 |
| Broadcom | 0 | 3 | 29 | 1 | 2.94 |
Qualcomm currently has a consensus target price of $184.29, indicating a potential downside of 13.91%. Broadcom has a consensus target price of $490.13, indicating a potential upside of 30.11%. Given Broadcom’s stronger consensus rating and higher probable upside, analysts plainly believe Broadcom is more favorable than Qualcomm.
Volatility & Risk
Qualcomm has a beta of 1.59, meaning that its share price is 59% more volatile than the S&P 500. Comparatively, Broadcom has a beta of 1.41, meaning that its share price is 41% more volatile than the S&P 500.
Earnings and Valuation
This table compares Qualcomm and Broadcom”s gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Qualcomm | $44.28 billion | 5.10 | $5.54 billion | $9.20 | 23.27 |
| Broadcom | $63.89 billion | 28.05 | $23.13 billion | $6.00 | 62.79 |
Broadcom has higher revenue and earnings than Qualcomm. Qualcomm is trading at a lower price-to-earnings ratio than Broadcom, indicating that it is currently the more affordable of the two stocks.
Summary
Broadcom beats Qualcomm on 12 of the 18 factors compared between the two stocks.
About Qualcomm
Qualcomm Incorporated engages in the development and commercialization of foundational technologies for the wireless industry 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 3G/4G/5G and other technologies for use in wireless voice and data communications, networking, computing, multimedia, and position location 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, WCDMA, LTE and/or OFDMA-based 5G standards and their derivatives. The QSI segment invests in early-stage companies in various industries, including 5G, artificial intelligence, automotive, consumer, enterprise, cloud, IoT, and extended reality, and investments, including non-marketable equity securities and, to a lesser extent, marketable equity securities, and convertible debt instruments. It also provides development, and other services and related products to the United States government agencies and their contractors. The company was incorporated in 1985 and is headquartered in San Diego, California.
About Broadcom
Broadcom Inc. designs, develops, and supplies various semiconductor devices with a focus on complex digital and mixed signal complementary metal oxide semiconductor based devices and analog III-V based products worldwide. The company operates in two segments, Semiconductor Solutions and Infrastructure Software. It provides set-top box system-on-chips (SoCs); cable, digital subscriber line, and passive optical networking central office/consumer premise equipment SoCs; wireless local area network access point SoCs; Ethernet switching and routing custom silicon solutions; serializer/deserializer application specific integrated circuits; optical and copper, and physical layer devices; and fiber optic components and RF semiconductor devices. The company also offers RF front end modules and filter; Wi-Fi, Bluetooth, and global positioning system/global navigation satellite system SoCs; custom touch controllers; inductive charging; attached small computer system interface, and redundant array of independent disks controllers and adapters; peripheral component interconnect express; fiber channel host bus adapters; read channel based SoCs; custom flash controllers; preamplifiers; optocouplers, industrial fiber optics, and motion control encoders and subsystems; light emitting diode, ethernet PHYs, switch ICs, and camera microcontrollers. Its products are used in various applications, including enterprise and data center networking, home connectivity, set-top boxes, broadband access, telecommunication equipment, smartphones and base stations, data center servers and storage systems, factory automation, power generation and alternative energy systems, and electronic displays. Broadcom Inc. was founded in 1961 and is headquartered in Palo Alto, California.
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