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

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Investors looking for stocks in the Wireless Equipment sector might want to consider either Nokia (NOK - Free Report) or InterDigital (IDCC - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Nokia and InterDigital are sporting Zacks Ranks of #2 (Buy) and #5 (Strong Sell), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that NOK is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.

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.

Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

NOK currently has a forward P/E ratio of 18.05, while IDCC has a forward P/E of 43.43. We also note that NOK has a PEG ratio of 1.16. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. IDCC currently has a PEG ratio of 2.90.

Another notable valuation metric for NOK is its P/B ratio of 1.63. 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 2.55.

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

NOK has seen stronger estimate revision activity and sports more attractive valuation metrics than IDCC, so it seems like value investors will conclude that NOK is the superior option right now.


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