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IDCC vs. SWIR: Which Stock Is the Better Value Option?

·2-min read

Investors looking for stocks in the Wireless Equipment sector might want to consider either InterDigital (IDCC) or Sierra Wireless (SWIR). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Currently, both InterDigital and Sierra Wireless are holding a Zacks Rank of # 2 (Buy). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. However, value investors will care about much more than just this.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

IDCC currently has a forward P/E ratio of 21.29, while SWIR has a forward P/E of 26.68. We also note that IDCC has a PEG ratio of 1.42. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. SWIR currently has a PEG ratio of 1.78.

Another notable valuation metric for IDCC is its P/B ratio of 2.37. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, SWIR has a P/B of 3.27.

Based on these metrics and many more, IDCC holds a Value grade of B, while SWIR has a Value grade of D.

Both IDCC and SWIR are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that IDCC is the superior value option right now.


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InterDigital, Inc. (IDCC) : Free Stock Analysis Report
 
Sierra Wireless, Inc. (SWIR) : Free Stock Analysis Report
 
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