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IDCC or MSI: Which Is the Better Value Stock Right Now?

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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.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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.

Currently, InterDigital has a Zacks Rank of #1 (Strong 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. However, value investors will care about much more than just this.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

IDCC currently has a forward P/E ratio of 13.82, while MSI has a forward P/E of 25.24. We also note that IDCC has a PEG ratio of 0.99. 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. MSI currently has a PEG ratio of 2.80.

Another notable valuation metric for IDCC is its P/B ratio of 3.62. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, MSI has a P/B of 191.01.

These are just a few of the metrics contributing to IDCC's Value grade of B and MSI's 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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