Head-To-Head Contrast: Smith Micro Software (NASDAQ:SMSI) versus InterDigital (NASDAQ:IDCC)

InterDigital (NASDAQ:IDCC) and Smith Micro Software (NASDAQ:SMSI) are both technology companies, but which is the superior stock? We will contrast the two businesses based on the strength of their profitability, analyst recommendations, institutional ownership, risk, valuation, earnings and dividends.

Volatility & Risk

InterDigital has a beta of 1.5, meaning that its stock price is 50% more volatile than the S&P 500. Comparatively, Smith Micro Software has a beta of 0.68, meaning that its stock price is 32% less volatile than the S&P 500.

Profitability

This table compares InterDigital and Smith Micro Software’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
InterDigital	38.53%	28.34%	15.55%
Smith Micro Software	-92.60%	-44.59%	-31.78%

Earnings and Valuation

This table compares InterDigital and Smith Micro Software”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
InterDigital	$817.25 million	8.99	$406.64 million	$9.08	31.42
Smith Micro Software	$16.88 million	0.74	-$29.33 million	($3.52)	-0.64

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

Insider & Institutional Ownership

99.8% of InterDigital shares are held by institutional investors. Comparatively, 20.8% of Smith Micro Software shares are held by institutional investors. 3.5% of InterDigital shares are held by company insiders. Comparatively, 34.7% of Smith Micro Software shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings and price targets for InterDigital and Smith Micro Software, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
InterDigital	0	2	2	0	2.50
Smith Micro Software	1	0	2	0	2.33

InterDigital currently has a consensus price target of $425.00, indicating a potential upside of 48.98%. Smith Micro Software has a consensus price target of $12.50, indicating a potential upside of 455.56%. Given Smith Micro Software’s higher possible upside, analysts clearly believe Smith Micro Software is more favorable than InterDigital.

Summary

InterDigital beats Smith Micro Software on 11 of the 13 factors compared between the two stocks.

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.

About Smith Micro Software

Smith Micro Software, Inc. engages in the development and sale of software to enhance the mobile experience to wireless and cable service providers in the Americas, Europe, the Middle East, and Africa. The company offers SafePath Family, SafePath IoT, SafePath Home, and SafePath Premium product suite, which provides tools to protect digital lifestyles and manage connected devices inside and outside the home; and CommSuite, a messaging platform that helps mobile service provides deliver a next-generation voicemail experience to mobile subscribers, as well as enables multi-language voice-to-text (VTT) transcription messaging. It also offers ViewSpot, a retail display management platform that provides on-screen and interactive demos to wireless carriers and other smartphone retailers; and technical support and customer services. Smith Micro Software, Inc. was founded in 1982 and is headquartered in Pittsburgh, Pennsylvania.