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

Valuation and Earnings

This table compares InterDigital and Harmonic’s revenue, earnings per share (EPS) 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
Harmonic $379.77 million 0.61 -$18.46 million ($1.03) -2.77

InterDigital has higher revenue and earnings than Harmonic. Harmonic 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

71.0% of InterDigital shares are held by institutional investors. Comparatively, 99.1% of Harmonic shares are held by institutional investors. 1.9% of InterDigital shares are held by company insiders. Comparatively, 4.3% of Harmonic shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Profitability

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

Net Margins Return on Equity Return on Assets
InterDigital 45.92% 44.58% 19.04%
Harmonic -21.58% -13.22% -6.31%

Dividends

InterDigital pays an annual dividend of $1.20 per share and has a dividend yield of 1.6%. Harmonic does not pay a dividend. InterDigital pays out 13.0% of its earnings in the form of a dividend.

Volatility & Risk

InterDigital has a beta of 0.95, meaning that its share price is 5% less volatile than the S&P 500. Comparatively, Harmonic has a beta of 0.96, meaning that its share price is 4% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current recommendations for InterDigital and Harmonic, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
InterDigital 0 3 2 0 2.40
Harmonic 0 2 1 0 2.33

InterDigital currently has a consensus target price of $91.33, indicating a potential upside of 22.35%. Harmonic has a consensus target price of $5.50, indicating a potential upside of 92.98%. Given Harmonic’s higher probable upside, analysts plainly believe Harmonic is more favorable than InterDigital.

Summary

InterDigital beats Harmonic on 10 of the 15 factors compared between the two stocks.

InterDigital Company Profile

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.

Harmonic Company Profile

Harmonic Inc. (Harmonic) designs, manufactures and sells video infrastructure products, and system solutions. The Company has two segments: Video and Cable Edge. Harmonic provides technical support and professional services to its customers around the world. The Video segment sells video processing and production, and playout solutions and services to broadcast and media companies, streaming media companies, cable operators, and satellite and telecommunications (telco), and pay television (TV) service providers. Its Cable Edge business sells cable edge solutions and related services to cable operators around the world. The Video segment offers a range of products and solutions, as well as software-based media processing platforms. The Company’s Narrowcast Services Gateway (NSG) products are integrated edge gateway products that integrate routing, multiplexing, scrambling and modulation into a single package for the delivery of narrowcast services to subscribers over cable networks.

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