InterDigital (NASDAQ: IDCC) and Digi International (NASDAQ:DGII) are both computer and technology companies, but which is the better business? We will compare the two companies based on the strength of their analyst recommendations, risk, earnings, profitability, dividends, valuation and institutional ownership.
Volatility and Risk
InterDigital has a beta of 0.95, indicating that its share price is 5% less volatile than the S&P 500. Comparatively, Digi International has a beta of 1.45, indicating that its share price is 45% more volatile than the S&P 500.
InterDigital pays an annual dividend of $1.20 per share and has a dividend yield of 1.6%. Digi International does not pay a dividend. InterDigital pays out 13.0% of its earnings in the form of a dividend.
This table compares InterDigital and Digi International’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Earnings and Valuation
This table compares InterDigital and Digi International’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|InterDigital||$712.48 million||3.64||$534.85 million||$9.23||8.09|
|Digi International||$186.98 million||1.33||$16.27 million||$0.33||28.33|
InterDigital has higher revenue and earnings than Digi International. InterDigital is trading at a lower price-to-earnings ratio than Digi International, indicating that it is currently the more affordable of the two stocks.
This is a breakdown of recent ratings and price targets for InterDigital and Digi International, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
InterDigital presently has a consensus price target of $91.33, suggesting a potential upside of 22.35%. Digi International has a consensus price target of $15.33, suggesting a potential upside of 63.99%. Given Digi International’s stronger consensus rating and higher possible upside, analysts clearly believe Digi International is more favorable than InterDigital.
Institutional and Insider Ownership
71.0% of InterDigital shares are owned by institutional investors. Comparatively, 78.3% of Digi International shares are owned by institutional investors. 1.9% of InterDigital shares are owned by company insiders. Comparatively, 6.9% of Digi International shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.
InterDigital, Inc. designs and develops technologies for wireless communications. The Company is focused on three technology areas: cellular wireless technology, Internet of things (IoT) technology, and, through its Hillcrest Laboratories, Inc. (Hillcrest Labs) subsidiary, sensor and sensor fusion technology. It offers a range of technologies that are used in digital cellular and wireless products and networks, including second generation (2G), third generation (3G), fourth generation (4G) and IEEE 802-related products and networks. Products incorporating its inventions include mobile devices, such as cellular phones, tablets, notebook computers and wireless personal digital assistants; wireless infrastructure equipment, such as base stations; components, dongles and modules for wireless devices, and IoT devices and software platforms. The Company is developing a range of technologies in the areas of video compression and delivery, security, analytics, and other areas.
About Digi International
Digi International Inc. is a provider of mission and business-critical machine-to-machine (M2M) and Internet-of-Things (IoT) connectivity products and services. The Company creates connected products and deploys and manages critical communications infrastructures in a range of environments. It offers four categories of hardware products: cellular routers and gateways, radio frequency (RF), embedded and network products. The Company’s cellular product category includes its cellular routers and all gateways. The Company’s RF product category includes its XBee modules, as well as other RF Solutions. Its embedded product category includes Digi Connect and Rabbit embedded systems on module and single board computers. Its network product category includes console and serial servers and universal serial bus (USB) connected products. The Company’s service offerings include wireless design services, Digi Device Cloud (which includes Digi Remote Manager) and enterprise support services.
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