Nokia (NYSE:NOK) versus InterDigital (NASDAQ:IDCC) Critical Survey

Nokia (NYSE:NOK) and InterDigital (NASDAQ:IDCC) are both computer and technology companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, analyst recommendations, risk, valuation, institutional ownership, earnings and profitability.

Risk & Volatility

Nokia has a beta of 0.9, suggesting that its share price is 10% less volatile than the S&P 500. Comparatively, InterDigital has a beta of 1.42, suggesting that its share price is 42% more volatile than the S&P 500.

Profitability

This table compares Nokia and InterDigital’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Nokia	5.30%	8.36%	4.49%
InterDigital	51.92%	53.44%	25.99%

Valuation & Earnings

This table compares Nokia and InterDigital”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Nokia	$20.80 billion	1.20	$1.38 billion	$0.20	23.25
InterDigital	$868.52 million	10.25	$358.61 million	$14.03	24.59

Nokia has higher revenue and earnings than InterDigital. Nokia is trading at a lower price-to-earnings ratio than InterDigital, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

5.3% of Nokia shares are owned by institutional investors. Comparatively, 99.8% of InterDigital shares are owned by institutional investors. 2.3% of InterDigital shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Dividends

Nokia pays an annual dividend of $0.13 per share and has a dividend yield of 2.8%. InterDigital pays an annual dividend of $2.40 per share and has a dividend yield of 0.7%. Nokia pays out 65.0% of its earnings in the form of a dividend. InterDigital pays out 17.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. InterDigital has raised its dividend for 3 consecutive years.

Analyst Recommendations

This is a breakdown of recent ratings for Nokia and InterDigital, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Nokia	1	0	6	0	2.71
InterDigital	0	0	2	0	3.00

Nokia currently has a consensus price target of $5.52, suggesting a potential upside of 18.64%. InterDigital has a consensus price target of $350.00, suggesting a potential upside of 1.43%. Given Nokia’s higher probable upside, research analysts plainly believe Nokia is more favorable than InterDigital.

Summary

InterDigital beats Nokia on 12 of the 17 factors compared between the two stocks.

About Nokia

Nokia Oyj provides mobile, fixed, and cloud network solutions worldwide. The company operates through four segments: Network Infrastructure, Mobile Networks, Cloud and Network Services, and Nokia Technologies. The company provides fixed networking solutions, such as fiber and copper-based access infrastructure, in-home Wi-Fi solutions, and cloud and virtualization services; IP networking solutions, including IP access, aggregation, and edge and core routing for residential, mobile, enterprise and cloud applications; optical networks solutions that provides optical transport networks for metro, regional, and long-haul applications, and subsea applications; and submarine networks for undersea cable transmission. It serves its products and services to communications service providers, webscales and hyperscalers, digital industries, and government. The company also offers mobile technology products and services for radio access networks and microwave radio links for transport networks, network management solutions, as well as network planning, optimization, network deployment, and technical support services. In addition, it offers cloud and network services, including core network solutions, such as voice and packet core; business applications, such as security, automation, and monetization; cloud and cognitive services; and enterprise solutions, including private wireless and industrial automation. Further, the company licenses intellectual property, including patents, technologies, and the Nokia brand. Nokia Oyj was founded in 1865 and is headquartered in Espoo, Finland.

About InterDigital

InterDigital, Inc. operates as a global research and development company with focus primarily on wireless, visual, artificial intelligence (AI), and related technologies. The company engages in the design and development of technologies that enable connected in a range of communications and entertainment products and services, which are licensed to companies providing such products and services, including makers of wireless communications, consumer electronics, IoT devices, and cars and other motor vehicles, as well as providers of cloud-based services, such as video streaming. It designs and develops a range of innovations for use in digital cellular and wireless products and networks, including 2G, 3G, 4G, 5G, and IEEE 802-related products and networks. The company also develops cellular technologies, such as technologies related to CDMA, TDMA, OFDM/OFDMA, and MIMO for use in 2G, 3G, 4G, and 5G wireless networks, as well as mobile terminal devices; and 3GPP technology portfolio in 5G, 5G, advanced and 6G, as well as technologies for automobiles, wearables, smart homes, drones, and other connected consumer electronic products. In addition, it provides video coding and transmission technologies; and engages in the research and development of artificial intelligence and machine learning solutions. Further, the company's patented technologies are used in various products that include smartphones, tablets, consumer electronics, and base stations; televisions, laptops, gaming consoles, set-top boxes, streaming devices, and connected automobiles. InterDigital, Inc. was incorporated in 1972 and is headquartered in Wilmington, Delaware.