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NOK vs. IDCC: Which Stock Should Value Investors Buy Now?

Zacks Equity Research
·2-min read

Investors interested in stocks from the Wireless Equipment sector have probably already heard of Nokia (NOK) and InterDigital (IDCC). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. 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.

Nokia and InterDigital are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that NOK likely has seen a stronger improvement to its earnings outlook than IDCC has recently. However, value investors will care about much more than just this.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.

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Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

NOK currently has a forward P/E ratio of 18.16, while IDCC has a forward P/E of 41.73. We also note that NOK has a PEG ratio of 1.16. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. IDCC currently has a PEG ratio of 2.78.

Another notable valuation metric for NOK is its P/B ratio of 1.41. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, IDCC has a P/B of 2.36.

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

NOK sticks out from IDCC in both our Zacks Rank and Style Scores models, so value investors will likely feel that NOK is the better option right now.


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Nokia Corporation (NOK) : Free Stock Analysis Report
 
InterDigital, Inc. (IDCC) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research