JNPR vs. IDCC: Which Stock Is the Better Value Option?
Investors looking for stocks in the Wireless Equipment sector might want to consider either Juniper Networks (JNPR) or InterDigital (IDCC). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Juniper Networks and InterDigital are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that JNPR has an improving earnings outlook. But this is just one factor that value investors are interested in.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
JNPR currently has a forward P/E ratio of 14.45, while IDCC has a forward P/E of 106. We also note that JNPR has a PEG ratio of 2.34. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. IDCC currently has a PEG ratio of 7.07.
Another notable valuation metric for JNPR is its P/B ratio of 1.81. 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 2.48.
Based on these metrics and many more, JNPR holds a Value grade of B, while IDCC has a Value grade of D.
JNPR is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that JNPR is likely the superior value option right now.
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