Critical Review: InterDigital (NASDAQ:IDCC) vs. Acme Packet (APKT)

Acme Packet (NASDAQ: APKT) and InterDigital (NASDAQ:IDCC) are both technology companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, institutional ownership, valuation, analyst recommendations, dividends, earnings and risk.

Insider & Institutional Ownership

72.9% of InterDigital shares are held by institutional investors. 1.9% of InterDigital shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Acme Packet and InterDigital, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Acme Packet 0 0 0 0 N/A
InterDigital 0 2 2 0 2.50

InterDigital has a consensus price target of $94.00, indicating a potential upside of 16.26%.

Profitability

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

Net Margins Return on Equity Return on Assets
Acme Packet N/A N/A N/A
InterDigital 42.94% 32.77% 14.02%

Earnings and Valuation

This table compares Acme Packet and InterDigital’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Acme Packet N/A N/A N/A ($0.08) N/A
InterDigital $665.85 million 4.21 $309.00 million $7.24 11.17

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

Dividends

InterDigital pays an annual dividend of $1.40 per share and has a dividend yield of 1.7%. Acme Packet does not pay a dividend. InterDigital pays out 19.3% of its earnings in the form of a dividend.

Summary

InterDigital beats Acme Packet on 9 of the 10 factors compared between the two stocks.

About Acme Packet

Acme Packet, Inc. provides session delivery network solutions, which enable the delivery of collaboration services, applications, and next-generation voice, video, data and unified communication and collaboration services and applications across Internet Protocol (IP), networks. The Company’s session delivery network solutions are used by over 1,925 Acme Packet customers in 109 countries. The Company’s customers include fixed line, cable, mobile, transit and over-the-top (OTT), communication service providers, as well as enterprises, contacts centers and government organizations. The Company sells its products and support services through over 330 distribution partners and through its direct sales force. In April 2012, the Company acquired IPTEGO GmbH.

About InterDigital

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.

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