QCOM Holdings, Inc. (QCOM)vs SHOP Holdings, Inc. (SHOP)

Quick verdict

QCOM Holdings, Inc. (QCOM) and SHOP Holdings, Inc. (SHOP) appeal to different investors. On our six-factor framework, QCOM scores 3.5 and SHOP scores 2.5. neither clearly looks cheaper on the multiples that matter, while QCOM grows faster and SHOP earns higher returns on capital. Overall, QCOM edges this comparison, but the right pick depends on whether you prioritise value, growth, income or balance-sheet safety.

2-year relative performance

At-a-glance comparison

Business model and revenue mix

QCOM Holdings, Inc. operates in Software—Infrastructure (Technology), while SHOP Holdings, Inc. sits in Beverages (Consumer Defensive). The two operate in different sectors, so cyclicality and end-market exposure differ — factor that into any portfolio overlap. QCOM carries a beta of 1.14 versus 0.64 for SHOP, meaning QCOM has historically been the more volatile of the two.

Valuation

On valuation, neither clearly is the cheaper stock. QCOM trades on a forward P/E of n/a and EV/EBITDA of 12.51, against 16.83 and 10.2 for SHOP. Price-to-sales is 1.25 vs 3.26, and free-cash-flow yield is 1.2% vs 2.0%. A higher multiple is only justified if the company can sustain faster growth or wider margins, which is exactly what the next sections test.

Growth profile

QCOM is the faster grower. QCOM has compounded revenue at 10.8% over three years with EPS growth of 10.4%, while SHOP has delivered 4.0% revenue and 3.5% EPS growth. Growth like this is the single biggest driver of long-term returns, but it also tends to come with a richer valuation, so it must be weighed against the multiples above.

Profitability and quality

On profitability and quality, SHOP is stronger. QCOM posts a -7.8% operating margin, -15.3% return on equity and -11.5% return on invested capital. SHOP posts 15.5%, 47.7% and 8.3% respectively. Return on invested capital above roughly 15% is a hallmark of a durable competitive advantage, so this metric deserves particular attention.

Balance-sheet risk

SHOP has the safer balance sheet. QCOM carries net-debt/EBITDA of 1.67x with a current ratio of 2.20, versus 0.69x and 3.24 for SHOP. Lower leverage gives a company more room to invest through a downturn and reduces the risk of dilution or distress.

Price performance and shareholder returns

Over the past year QCOM returned 63.1% against 42.9% for SHOP; on a three-year annualised basis it is 13.4% vs 16.6%. QCOM yields 2.4% and SHOP yields 1.4%. Past performance never guarantees future results, but the multi-year track record shows how the market has rewarded each business so far.

Which stock fits which investor

For value-oriented investors, QCOM is the better fit on today's multiples. Growth investors will likely prefer QCOM, which is expanding faster. Income investors should lean toward QCOM for its higher shareholder yield, while investors who prize quality-at-a-reasonable-price will favour SHOP for its superior returns on capital. This is a comparison of facts, not a recommendation — your time horizon, risk tolerance and existing holdings should drive the final decision.

• Value: QCOM
• Growth: QCOM
• Income: QCOM
• Quality: SHOP

Frequently asked questions

Is QCOM or SHOP the better buy right now?

Neither is universally "better." QCOM scores 3.5 and SHOP scores 2.5 on our six-factor framework. neither clearly is cheaper, QCOM grows faster, and SHOP is higher quality — so the right pick depends on your objective.

Which stock is cheaper, QCOM or SHOP?

neither clearly is the cheaper stock across forward P/E (n/a vs 16.83), EV/EBITDA (12.51 vs 10.2) and price-to-sales (1.25 vs 3.26).

Which has grown faster, QCOM or SHOP?

QCOM has the stronger growth profile, with three-year revenue CAGR of 10.8% for QCOM versus 4.0% for SHOP.

Which stock pays a bigger dividend?

QCOM yields 2.4% and SHOP yields 1.4%, so QCOM is the stronger income choice.

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