Has IDCC Quietly Become a Value Play?

Here is why we think InterDigital (IDCC) deserves consideration as a value stock.

• Reasonable Revenue Growth: 21.8% LTM and 23.3% last 3 year average.
• Cash Generative: Nearly 30.7% free cash flow margin and 60.4% operating margin LTM.
• No Major Shocks: IDCC has avoided any revenue collapses in the last 3 years.
• Modest Valuation: Despite encouraging fundamentals, IDCC trades at a PE multiple of 15.2
• Opportunity vs S&P: Compared to S&P, you get lower valuation, higher revenue growth, and better margins

As a quick background, InterDigital provides technology solutions that enhance wireless communications and digital cellular products, including 2G to 5G, across multiple global markets.

*LTM: Last Twelve Months

But do these numbers tell the full story? Read Buy or Sell IDCC Stock to see if InterDigital still has an edge that holds up under the hood.

That is one way to look at stocks. Trefis High Quality Portfolio evaluates much more, and is designed to reduce stock-specific risk while giving upside exposure

Stocks Like These Can Outperform. Here Is Data

For 65 similar value stocks chosen as of mid 2024, consider the following stats for the subsequent 1 year period.

• Average peak return of 39.3% vs 14.4% for S&P, with maximum peak return of 133%
• Win rate of 60%; win rate represents % of stocks with positive return
• Average 1-year return of 14.6%, similar to S&P’s despite tariff instability

But Consider The Risk

That said, IDCC isn’t immune to big drops. It plunged 94% in the Dot-Com Bubble, which is huge. The Global Financial Crisis saw it fall over 53%, and the 2018 correction took it down just over 51%. Even more recent shocks like Covid and the Inflation Shock triggered 47% and 51% declines, respectively. So while IDCC might have solid fundamentals, sharp sell-offs have hit it hard before. When markets sell off, this stock can get caught up too.

But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read IDCC Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.