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

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Investors with an interest in Wireless Equipment stocks have likely encountered both Nokia (NOK - Free Report) and 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.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. 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, Nokia has a Zacks Rank of #2 (Buy), while InterDigital has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that NOK likely has seen a stronger improvement to its earnings outlook than IDCC has recently. But this is only part of the picture for value investors.

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.

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 18.52, while IDCC has a forward P/E of 286.29. We also note that NOK has a PEG ratio of 12.43. 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 19.09.

Another notable valuation metric for NOK is its P/B ratio of 1.99. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, IDCC has a P/B of 2.89.

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

NOK is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that NOK is likely the superior value option right now.


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