ONE LEVEL DEEPER
QCOM
Warren Buffett frameworkThe Owner-OperatorBenjamin Graham frameworkThe Value ArchitectMichael Mauboussin frameworkThe Expectations EngineerHoward Marks frameworkThe Cycle WhispererPeter Lynch frameworkThe Everyday Edge

At $129 with 1.62% earnings yield vs 4.33% treasuries, the margin of safety lies in growth, not current yield.

cautiousBullishconviction

This framework sees a business generating fortress-level returns at a price suggesting Mr. Market has already fled the building.

THE LENSES
THE PRICE YOU PAYattractive

What do you receive in earnings, assets, and dividends per dollar of price paid?

P/E ratio of 15.4x sits at 38th percentile of 10-year range
EV/EBITDA of 57.4x at 50th percentile historically
Price at $128.78 vs DCF fair value of $186.62 — a 31% discount
Earnings yield of 1.62% with $0.788 quarterly dividend

Applying this lens, the price offers substantial earnings power at historically modest multiples. The 15.4x P/E for a business with 27.5% operating margins and consistent execution appears to price in significant pessimism.

P/E Ratio
THE MARGIN OF SAFETYprotected

Does the price protect me from permanent loss of capital?

Current price of $128.78 trades 31% below DCF fair value of $186.62
Stock down 45.1% from $227.09 peak in Q4'24
Reverse DCF implies 13% perpetual growth vs 10.3% trailing rate
Trading at 38th percentile P/E despite 98th percentile revenue

This framework suggests a meaningful margin of safety exists. The 31% discount to intrinsic value provides cushion even if growth moderates, while the depressed valuation percentiles indicate Mr. Market's pessimism may have overshot.

EV / EBITDA
THE EARNINGS RECORDexceptional

Does the company have a demonstrated track record of consistent earnings over 7-10 years?

90% earnings beat rate over 39 quarters — 35 double beats
Revenue reached $12.3B in Q4'25, 98th percentile of 10-year range
Operating income of $3.37B with 27.5% margins maintained
Net income positive in 19 of last 20 quarters despite Q3'25 anomaly

The earnings record demonstrates exceptional consistency that Graham would recognize as investment-grade. A 90% beat rate over nearly a decade with expanding margins shows not luck but systematic operational excellence.

Earnings Per Share
BALANCE SHEET FORTRESSfortress

Can this business survive a prolonged downturn?

Debt-to-equity ratio of 0.64x with manageable leverage
Current ratio of 1.52x and quick ratio of 1.07x show liquidity
Interest coverage of 29.9x demonstrates easy debt service ability
$7.2B cash position with positive $13B TTM free cash flow

Applying this lens reveals a fortress balance sheet capable of weathering severe storms. The combination of modest leverage, strong coverage, and robust cash generation provides the financial resilience Graham demanded.

Debt / Equity
EARNINGS YIELD VS BONDSchallenged

Does the equity offer adequate premium over risk-free bonds?

Earnings yield of 1.62% vs 10-year treasury at 4.33%
Negative spread of 271 basis points
TTM revenue growth of 10.3% could close the gap over time
Operating margin expansion to 27.5% improves future yield potential

This framework acknowledges the current negative spread reflects broad market conditions. However, the 10.3% growth rate suggests earnings yield will improve meaningfully, unlike a fixed bond coupon.

Earnings Yield
KEY NUMBERS
VERDICT

Applying the Graham framework reveals a business with fortress-level fundamentals trading at depression-era multiples. The 31% discount to intrinsic value, combined with consistent earnings power and balance sheet strength, offers the margin of safety Graham sought. While the earnings yield trails treasuries today, the growth trajectory suggests this gap will close. Is Mr. Market's 45% markdown creating the asymmetric opportunity that defines intelligent investing?

This analysis applies Benjamin Graham's published investment framework to publicly available financial data. It is not authored by, endorsed by, or affiliated with Benjamin Graham. Educational purposes only. Not financial advice.

OTHER PERSPECTIVES
Michael Mauboussin framework
The Expectations Engineer
Bullish
Howard Marks framework
The Cycle Whisperer
Bullish
Peter Lynch framework
The Everyday Edge
Bullish
Warren Buffett framework
The Owner-Operator
Leaning Bullish
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