Financial Analysis: InterDigital (NASDAQ:IDCC) versus Xperi (NYSE:XPER)

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

Analyst Recommendations

This is a breakdown of current recommendations for Xperi and InterDigital, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Xperi	1	1	2	0	2.25
InterDigital	0	0	3	1	3.25

Xperi presently has a consensus price target of $11.00, suggesting a potential upside of 119.78%. InterDigital has a consensus price target of $450.00, suggesting a potential upside of 37.17%. Given Xperi’s higher probable upside, analysts plainly believe Xperi is more favorable than InterDigital.

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Xperi	$448.11 million	0.54	-$56.34 million	($0.70)	-7.15
InterDigital	$834.02 million	10.15	$406.64 million	$8.67	37.84

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

Institutional and Insider Ownership

94.3% of Xperi shares are owned by institutional investors. Comparatively, 99.8% of InterDigital shares are owned by institutional investors. 3.2% of Xperi shares are owned by company insiders. Comparatively, 3.5% of InterDigital shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Volatility & Risk

Xperi has a beta of 1.4, indicating that its share price is 40% more volatile than the S&P 500. Comparatively, InterDigital has a beta of 1.43, indicating that its share price is 43% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Xperi	-7.12%	4.04%	2.72%
InterDigital	38.32%	28.17%	15.00%

Summary

InterDigital beats Xperi on 14 of the 15 factors compared between the two stocks.

About Xperi

Xperi Holding Corporation, together with its subsidiaries, operates as a consumer and entertainment product/solutions licensing company worldwide. It operates through two segments, Product, and Intellectual Property Licensing. The company invents, develops, and delivers various technologies. It licenses audio, digital radio, imaging, edge-based machine learning, and multi-channel video user experience solutions to consumer electronics customers, automotive manufacturers, or supply chain partners. The company also provides licensing to multichannel video programming distributors, OTT video service providers, consumer electronics manufacturers, social media, and other new media companies in media industry; and memory, sensors, RF component, and foundry companies in semiconductor industry. It provides its technologies under the DTS, HD Radio, IMAX Enhanced, Invensas, TiVo, and Perceive brands. The company is headquartered in San Jose, California.

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.