Comparing Ribbon Communications (RBBN) and InterDigital (IDCC)

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

Profitability

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

Net Margins Return on Equity Return on Assets
Ribbon Communications -8.82% -1.87% -1.32%
InterDigital 42.94% 32.77% 14.02%

Insider and Institutional Ownership

31.9% of Ribbon Communications shares are owned by institutional investors. Comparatively, 68.9% of InterDigital shares are owned by institutional investors. 7.7% of Ribbon Communications shares are owned by company insiders. Comparatively, 1.9% of InterDigital shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Risk and Volatility

Ribbon Communications has a beta of 1.67, suggesting that its stock price is 67% more volatile than the S&P 500. Comparatively, InterDigital has a beta of 0.94, suggesting that its stock price is 6% less volatile than the S&P 500.

Dividends

InterDigital pays an annual dividend of $1.40 per share and has a dividend yield of 1.8%. Ribbon Communications does not pay a dividend. InterDigital pays out 19.3% of its earnings in the form of a dividend.

Analyst Recommendations

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

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ribbon Communications 1 1 4 0 2.50
InterDigital 0 2 2 0 2.50

Ribbon Communications currently has a consensus target price of $7.05, suggesting a potential upside of 1.73%. InterDigital has a consensus target price of $94.00, suggesting a potential upside of 19.82%. Given InterDigital’s higher probable upside, analysts clearly believe InterDigital is more favorable than Ribbon Communications.

Valuation and Earnings

This table compares Ribbon Communications and InterDigital’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Ribbon Communications $252.59 million 2.81 -$13.93 million ($0.45) -15.40
InterDigital $665.85 million 4.09 $309.00 million $7.24 10.84

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

Summary

InterDigital beats Ribbon Communications on 10 of the 14 factors compared between the two stocks.

Ribbon Communications Company Profile

Sonus Networks, Inc., formerly Solstice Sapphire Investments, Inc., is a provider of networked solutions for communications service providers and enterprises to help them secure and unify their real-time communications infrastructures. The Company helps communications service providers and enterprises hold the session initiation protocol (SIP) and fourth generation (4G)/long term evolution (LTE)-based solutions, including voice over Internet protocol (VoIP), voice over wireless fidelity (VoWiFi), video and unified communications (UC) by securing and enabling Internet Protocol (IP) networks. Its products include session border controllers (SBCs), diameter signaling controllers (DSCs) and VoWiFi solutions. Sonus Products include Sonus GSX9000 Open Services Switch, Sonus T7000 Intelligent Switching System, Sonus Diameter Signaling Controllers, Sonus Signal Transfer Points, Sonus PSX Policy & Routing Server, Sonus WebRTC Services Solution, and Sonus Network Management Solutions.

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.

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