InterDigital

IDCC

Software - Application · Technology

Price

$260.45

-5.14 (-1.94%)

Market Cap

$6.73B

Exchange

NASDAQ

Winston Score

Winston is curious

A decent business — some strong pillars, some weaker.

Share count rising — dilution

+10.3% over 4y

The company has issued more shares over this period, which dilutes each existing shareholder’s stake.

Diluted shares outstanding: 31.3M (2021) → 34.5M (2025)

InterDigital, Inc., together with its subsidiaries, designs and develops technologies that enable and enhance wireless communications in the United States, China, South Korea, Japan, Taiwan, and Europe. It provides technology solutions for use in digital cellular and wireless products and networks, including 2G, 3G, 4G, 5G, 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, 4G

Winston Score History

Score breakdown

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Quality

Gross Margin

79.6%

Premium pricing power — 79.6% gross margin

Operating Margin

30.2%

Excellent — 30.2% operating margin

ROCE

3.0%

Weak — 3.0% return on capital

ROIC between 0% and 5%. They earn a few cents back per dollar invested in the business.

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Growth

Sales YoY

-4.0%

Shrinking sales (-4.0% YoY)

EPS YoY

+11.4%

Earnings growing (11.4% YoY)

Healthy double-digit earnings growth — what compounders look like.

EPS Consistency

6/8 quarters

Earnings grew in most of the last 8 quarters

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Cash Flow

Cash Conversion

134%

Turns 134% of profit into real cash

FCF Margin

63.4%

Converts sales into free cash efficiently (63.4%)

Free cash flow margin above 20%. Out of every $100 in sales, more than $20 is real cash they keep.

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Stability

Debt / Equity

0.45

Conservative — low debt load (0.45)

Interest Cover

11.53x

Comfortably covers interest (11.5x)

Interest coverage above 8. Profits cover interest many times over.

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Valuation

P/E Ratio (TTM)

16.5x

Fair value — P/E 16.5

P/E in the normal range. Price is roughly $15 for every $1 of yearly profit.

P/E vs Forward

-22.5

SLOWING

Earnings expected to fall — forward P/E higher than today

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Dividends

Dividend Yield

0.96%

Small dividend — 0.96% yield

Modest yield. The bulk of any return needs to come from price appreciation.

Dividend Growth

+33.3%

Dividend growing fast (33.3% YoY)

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