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Long Ideas

Is Qorvo making money from Wi-Fi?

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Qorvo Inc. (NASDAQ: QRVO) could be a growth stock because of the incredible popularity of Wi-Fi. Wi-Fi connectivity; the technology that connects devices through wireless signals is Qorvo’s specialty.

For instance, CNBC estimates there could 6.68 network-connected (Wi-Fi) devices for each person on Earth. Furthermore, CNBC estimates there could be almost 50 million wireless devices in the world.

Wi-Fi is growing in popularity because of 5G and 6G wireless systems, and the Internet of Things (IoT). The Internet of Things connects physical devices to the internet and each other through Wi-Fi. Autonomous cars, smart appliances, smart thermostats, drones, and robots all rely upon the Internet of Things to operate.

How Qorvo can cash in on the Internet of Things

Qorvo provides the infrastructure for the Internet of Things. For example, its product lineup includes amplifiers, IoT Controllers, Integrated Products, Frequency Converters and Sources, and Switches.

The Qorvo bandBoost system provides high-speed 5G wireless connectivity for homes. In contrast, the Qorvo coexBootst provides high-speed 5G wireless connectivity for every device in a home or business. Meanwhile, the Qorvo EdgeBoost provides Wi-Fi inside and outside of your home.

Qurvo’s distributed Wi-Fi systems allow you to make every room in your home into a Wi-Fi hotspot. Thus, you can listen to your favorite podcast on your Bluetooth headphones everywhere.

For business Qurvo tailors Customer Premises Equipment (CPE) and enterprise system to companies’ needs. Qurvo can create an enterprise system to support a retailer’s wireless payments system on the store floor example. Hence, customers could pay anywhere in the store via Apple Pay or Google Pay.

Is Qorvo Making Money?

Currently, Qorvo is making money from wireless. Qorvo reported a quarterly gross profit of $323.58 million on quarterly revenues of $806.7 million on 30 September 2019.

However, Qorvo’s quarterly gross profit and quarterly revenues were down from $353.51 million and $884.44 million on 30 September 2018. On the other hand, the quarter gross profit and revenues were up from $294.29 million and $775.6 million on 30 June 2019.

Qorvo is having a hard time maintaining its revenues and gross profits. Yet Qorvo is making more income from its business.

For instance, Qorvo reported a quarterly operating income of $112.77 million on 30 September 2019. That number was up from $55.23 million on 30 June 2019 and $90.48 million on 30 September 2018.

Plus, Qorvo reported a quarterly common net income of $83.04 million. That number grew from $39.54 million on 30 June 2019 and $32.08 million on 30 September 2018.

How Much Cash is Qorvo generating?

Qorvo’s business generates little cash. For example, Qorvo reported a negative ending cash flow of -$42.71 million on 30 September 2019. That was number was down from $629.95 million on 30 June 2019.

Additionally, Qorvo’s operating cash flow fell from $257.12 million on 30 June 2019 to $173.41 million on 30 September 2019. Thus, Qovoro is generating less cash.

Consequently, Qorvo had $586.79 million in cash and short-term investments on 30 September 2019. That number was down from $629.60 million on 30 June 2019.

Is Qorvo a Growth Stock?

Qorvo’s revenues shrank drank dramatically in the quarter that ended on 30 June 2019.

Stockrow reports Qorvo’s revenues grew at a rate of 8.79% during that quarter. In contrast, those revenues grew at a rate of 11.97% in the quarter ending on 30 September 2019.

Thus, I think Qorovo may not be a growth stock. Under those circumstances, I think Mr. Market overvalued Qorvo overpriced Qrovo at $113.56 on 28 January 2020. In my opinion, that price is far too high.

Is Qorvo an Income Stock?

I think Qorvo (NYSE: QRVO) is a lousy stock because it pays no dividend. Thus, it has no margin of safety and offers no income.

I believe Qorvo is too expensive to be a good speculative stock. Hence, I think investors need to avoid Qorvo until it pays a dividend or displays far more growth.