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InterDigital, Inc. (IDCC) Hits Fresh High: Is There Still Room to Run?

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Have you been paying attention to shares of InterDigital (IDCC - Free Report) ? Shares have been on the move with the stock up 15.6% over the past month. The stock hit a new 52-week high of $166.46 in the previous session. InterDigital has gained 52.7% since the start of the year compared to the 24.7% move for the Zacks Computer and Technology sector and the 29.8% return for the Zacks Wireless Equipment industry.

What's Driving the Outperformance?

The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on October 31, 2024, InterDigital reported EPS of $1.63 versus consensus estimate of $0.76.

Valuation Metrics

InterDigital may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.

On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.

InterDigital has a Value Score of B. The stock's Growth and Momentum Scores are B and D, respectively, giving the company a VGM Score of A.

In terms of its value breakdown, the stock currently trades at 16X current fiscal year EPS estimates, which is not in-line with the peer industry average of 16X. On a trailing cash flow basis, the stock currently trades at 13.9X versus its peer group's average of 13X. Additionally, the stock has a PEG ratio of 0.92. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.

Zacks Rank

We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, InterDigital currently has a Zacks Rank of #1 (Strong Buy) thanks to rising earnings estimates.

Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if InterDigital passes the test. Thus, it seems as though InterDigital shares could still be poised for more gains ahead.


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