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IDCC vs. MSI: 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 InterDigital (IDCC - Free Report) or Motorola (MSI - Free Report) . 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Currently, InterDigital has a Zacks Rank of #2 (Buy), while Motorola has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that IDCC likely has seen a stronger improvement to its earnings outlook than MSI has recently. But this is just one factor that value investors are interested in.

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.

IDCC currently has a forward P/E ratio of 15.70, while MSI has a forward P/E of 25.55. We also note that IDCC has a PEG ratio of 1.37. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. MSI currently has a PEG ratio of 2.84.

Another notable valuation metric for IDCC is its P/B ratio of 3.51. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, MSI has a P/B of 191.90.

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

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


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Motorola Solutions, Inc. (MSI) - free report >>

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