Cisco Systems (NASDAQ:CSCO) and InterDigital (NASDAQ:IDCC) are both computer and technology companies, but which is the better stock? We will compare the two companies based on the strength of their risk, institutional ownership, profitability, earnings, valuation, analyst recommendations and dividends.
Volatility and Risk
Cisco Systems has a beta of 0.95, suggesting that its share price is 5% less volatile than the S&P 500. Comparatively, InterDigital has a beta of 1.14, suggesting that its share price is 14% more volatile than the S&P 500.
Valuation and Earnings
This table compares Cisco Systems and InterDigital's revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
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Cisco Systems | $49.30 billion | 3.84 | $11.21 billion | $2.92 | 15.37 |
InterDigital | $318.92 million | 6.13 | $20.93 million | $0.66 | 96.02 |
Cisco Systems has higher revenue and earnings than InterDigital. Cisco Systems is trading at a lower price-to-earnings ratio than InterDigital, indicating that it is currently the more affordable of the two stocks.
Dividends
Cisco Systems pays an annual dividend of $1.44 per share and has a dividend yield of 3.2%. InterDigital pays an annual dividend of $1.40 per share and has a dividend yield of 2.2%. Cisco Systems pays out 49.3% of its earnings in the form of a dividend. InterDigital pays out 212.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Cisco Systems has increased its dividend for 7 consecutive years and InterDigital has increased its dividend for 1 consecutive years. Cisco Systems is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Institutional & Insider Ownership
70.6% of Cisco Systems shares are owned by institutional investors. Comparatively, 77.7% of InterDigital shares are owned by institutional investors. 0.0% of Cisco Systems shares are owned by company insiders. Comparatively, 1.7% of InterDigital shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.
Profitability
This table compares Cisco Systems and InterDigital's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
---|
Cisco Systems | 21.76% | 32.64% | 12.94% |
InterDigital | 16.17% | 5.25% | 2.65% |
Analyst Recommendations
This is a breakdown of recent ratings and recommmendations for Cisco Systems and InterDigital, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
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Cisco Systems | 0 | 15 | 10 | 0 | 2.40 |
InterDigital | 0 | 1 | 4 | 0 | 2.80 |
Cisco Systems presently has a consensus target price of $48.5652, indicating a potential upside of 8.24%. InterDigital has a consensus target price of $101.00, indicating a potential upside of 59.38%. Given InterDigital's stronger consensus rating and higher probable upside, analysts plainly believe InterDigital is more favorable than Cisco Systems.
Summary
Cisco Systems beats InterDigital on 10 of the 17 factors compared between the two stocks.