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

Valuation & Earnings

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
InterDigital $532.94 million 5.17 $174.29 million $6.06 13.14
Acacia Research $65.40 million 2.79 $22.18 million $2.97 1.21

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

Analyst Ratings

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

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
InterDigital 0 1 3 0 2.75
Acacia Research 1 0 1 0 2.00

InterDigital presently has a consensus price target of $90.50, indicating a potential upside of 13.69%. Acacia Research has a consensus price target of $6.50, indicating a potential upside of 80.56%. Given Acacia Research’s higher probable upside, analysts clearly believe Acacia Research is more favorable than InterDigital.

Volatility and Risk

InterDigital has a beta of 0.93, suggesting that its stock price is 7% less volatile than the S&P 500. Comparatively, Acacia Research has a beta of 0.99, suggesting that its stock price is 1% less volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
InterDigital 32.70% 26.52% 11.58%
Acacia Research 33.91% 50.06% 46.80%

Insider and Institutional Ownership

74.2% of InterDigital shares are owned by institutional investors. Comparatively, 65.8% of Acacia Research shares are owned by institutional investors. 1.9% of InterDigital shares are owned by insiders. Comparatively, 2.8% of Acacia Research shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Dividends

InterDigital pays an annual dividend of $1.40 per share and has a dividend yield of 1.8%. Acacia Research does not pay a dividend. InterDigital pays out 23.1% of its earnings in the form of a dividend.

Summary

InterDigital beats Acacia Research on 9 of the 16 factors compared between the two stocks.

InterDigital Company Profile

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.

Acacia Research Company Profile

Acacia Research Corporation, through its subsidiaries, invests in, licenses and enforces patented technologies. The Company’s operating subsidiaries partner with inventors and patent owners, applying their legal and technology expertise to patent assets to unlock the financial value in their patented inventions. The Company’s operating subsidiaries assist patent owners with the prosecution and development of their patent portfolios, the protection of their patented inventions from unauthorized use, the generation of licensing revenue from users of their patented technologies and, where necessary, with the enforcement against unauthorized users of their patented technologies through the filing of patent infringement litigation. The Company’s operating subsidiaries own or control the rights to multiple patent portfolios, which include the United States patents and certain foreign counterparts, covering technologies used in a range of industries.

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