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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 companies is the best option for those looking for undervalued stocks? Let's take a closer look.

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.

Nokia has a Zacks Rank of #2 (Buy), while InterDigital has a Zacks Rank of #4 (Sell) 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 also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.

NOK currently has a forward P/E ratio of 14.77, while IDCC has a forward P/E of 73.29. We also note that NOK 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. IDCC currently has a PEG ratio of 4.89.

Another notable valuation metric for NOK is its P/B ratio of 1.87. 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 2.83.

These are just a few of the metrics contributing to NOK's Value grade of A and IDCC's Value grade of C.

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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