Critical Survey: Digital Turbine (APPS) and InterDigital (IDCC)

Digital Turbine (NASDAQ: APPS) and InterDigital (NASDAQ:IDCC) are both computer and technology companies, but which is the superior investment? We will compare the two businesses based on the strength of their valuation, profitability, institutional ownership, earnings, risk, dividends and analyst recommendations.

Institutional and Insider Ownership

22.9% of Digital Turbine shares are held by institutional investors. Comparatively, 74.4% of InterDigital shares are held by institutional investors. 4.8% of Digital Turbine shares are held by insiders. Comparatively, 2.0% of InterDigital shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings and price targets for Digital Turbine and InterDigital, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Digital Turbine 0 0 3 0 3.00
InterDigital 0 0 3 0 3.00

Digital Turbine presently has a consensus price target of $1.93, suggesting a potential upside of 14.40%. InterDigital has a consensus price target of $90.50, suggesting a potential upside of 14.12%. Given Digital Turbine’s higher probable upside, equities analysts plainly believe Digital Turbine is more favorable than InterDigital.

Profitability

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

Net Margins Return on Equity Return on Assets
Digital Turbine -18.66% -22.65% -11.95%
InterDigital 32.42% 25.85% 12.64%

Earnings & Valuation

This table compares Digital Turbine and InterDigital’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Digital Turbine $91.55 million 1.39 -$24.26 million ($0.36) -4.69
InterDigital $532.94 million 5.17 $174.29 million $6.06 13.09

InterDigital has higher revenue and earnings than Digital Turbine. Digital Turbine 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 1.8%. Digital Turbine does not pay a dividend. InterDigital pays out 23.1% of its earnings in the form of a dividend.

Volatility & Risk

Digital Turbine has a beta of 1.4, meaning that its stock price is 40% more volatile than the S&P 500. Comparatively, InterDigital has a beta of 0.94, meaning that its stock price is 6% less volatile than the S&P 500.

Summary

InterDigital beats Digital Turbine on 10 of the 14 factors compared between the two stocks.

About Digital Turbine

Digital Turbine, Inc., through its subsidiaries, provides media and mobile communication solutions for mobile operators, app advertisers, device original equipment manufacturers, and other third parties worldwide. It operates through two segments, Advertising and Content. The Advertising segment offers Ignite, a mobile application management software to control, manage, and monetize the applications that are installed on mobile devices; Discover software, which provides application installation and management, as well as detailed reporting to advertisers and carriers; and mobile user acquisition platform that allows mobile advertisers to engage with right customers for their applications. This segment also provides syndicated network service, which accesses mobile ad inventory through publishers, including direct developer relationships, mobile Websites, mobile carriers, and mediated relationships; and programmatic advertising services. The Content segment offers Marketplace, an application and content store that manages the retailing of mobile content, including features, such as merchandising, product placements, reporting, pricing, promotions, and distribution of digital goods, as well as the distribution and licensing of content across various categories comprising music, applications, wallpapers, eBooks, and games; and Pay, an application programming interface that integrates billing infrastructure between mobile operators and content publishers to facilitate mobile commerce. The company was formerly known as Mandalay Digital Group, Inc. and changed its name to Digital Turbine, Inc. in January 2015. Digital Turbine, Inc. was incorporated in 1998 and is headquartered in Austin, Texas.

About InterDigital

InterDigital, Inc. designs and develops technologies that enable and enhance wireless communications in the United States and internationally. It offers technology solutions for use in digital cellular and wireless products and networks, including 2G, 3G, 4G, and IEEE 802-related products and networks. The company develops cellular technologies, such as technologies related to CDMA, TDMA, OFDM/OFDMA, and MIMO for use in 2G, 3G, and 4G wireless networks and mobile terminal devices; and other wireless technologies related to Wi-Fi, WLAN, WMAN, and WRAN. It also provides interoperability and scalability solutions through oneMPOWER platform; and common interface to multiple service providers. The company's patented technologies are used in various products, including mobile devices comprising cellular phones, tablets, notebook computers, and wireless personal digital assistants; wireless infrastructure equipment consisting of base stations; components, dongles, and modules for wireless devices; and Internet of Things devices and software platforms. As of December 31, 2017, it had a portfolio of approximately 19,000 patents and patent applications related to the fundamental technologies that enable wireless communications. InterDigital, Inc. was founded in 1972 and is headquartered in Wilmington, Delaware.

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