Investors interested in Wireless Equipment stocks are likely familiar with Sonim Technologies, Inc. (SONM) and InterDigital (IDCC). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, Sonim Technologies, Inc. has a Zacks Rank of #2 (Buy), while InterDigital has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that SONM has an improving earnings outlook. But this is just one piece of the puzzle for value investors.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
SONM currently has a forward P/E ratio of 28.07, while IDCC has a forward P/E of 172.88. We also note that SONM has a PEG ratio of 1.12. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. IDCC currently has a PEG ratio of 13.83.
Another notable valuation metric for SONM is its P/B ratio of 2.11. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, IDCC has a P/B of 2.15.
These are just a few of the metrics contributing to SONM's Value grade of B and IDCC's Value grade of D.
SONM has seen stronger estimate revision activity and sports more attractive valuation metrics than IDCC, so it seems like value investors will conclude that SONM is the superior option right now.
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