Analyzing Research Frontiers (REFR) and InterDigital (IDCC)

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

Analyst Ratings

This is a summary of recent recommendations and price targets for Research Frontiers and InterDigital, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Research Frontiers 0 0 1 0 3.00
InterDigital 0 0 4 0 3.00

Research Frontiers presently has a consensus price target of $3.00, suggesting a potential upside of 236.59%. InterDigital has a consensus price target of $97.00, suggesting a potential upside of 19.16%. Given Research Frontiers’ higher possible upside, equities research analysts clearly believe Research Frontiers is more favorable than InterDigital.

Institutional and Insider Ownership

8.1% of Research Frontiers shares are held by institutional investors. Comparatively, 74.0% of InterDigital shares are held by institutional investors. 9.5% of Research Frontiers shares are held by company insiders. Comparatively, 2.0% of InterDigital shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Risk and Volatility

Research Frontiers has a beta of 0.03, meaning that its share price is 97% less volatile than the S&P 500. Comparatively, InterDigital has a beta of 1.07, meaning that its share price is 7% more volatile than the S&P 500.

Earnings and Valuation

This table compares Research Frontiers and InterDigital’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Research Frontiers $1.51 million 15.01 -$2.41 million ($0.10) -8.91
InterDigital $532.94 million 5.32 $174.29 million $6.06 13.43

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

Profitability

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

Net Margins Return on Equity Return on Assets
Research Frontiers -145.67% -73.63% -64.80%
InterDigital 27.99% 19.85% 10.65%

Dividends

InterDigital pays an annual dividend of $1.40 per share and has a dividend yield of 1.7%. Research Frontiers does not pay a dividend. InterDigital pays out 23.1% of its earnings in the form of a dividend. InterDigital has increased its dividend for 4 consecutive years.

Summary

InterDigital beats Research Frontiers on 12 of the 16 factors compared between the two stocks.

About Research Frontiers

Research Frontiers Incorporated develops and markets technology and devices to control the flow of light in the United States. The company develops and licenses suspended particle device (SPD-Smart) light-control technology to companies that manufacture and market the SPD-Smart chemical emulsion, light-control film made from the chemical emulsion, the light-control panels made by laminating the film, lamination services, and electronics to power end-products incorporating the film, as well as the end-products, such as windows, skylights, and sunroofs. Its SPD-Smart light-control technology is used in various product applications, including windows, sunshades, skylights, and interior partitions for homes and buildings; automotive windows, sunroofs, sun-visors, sunshades, rear-view mirrors, instrument panels, and navigation systems; aircraft windows; museum display panels and eyewear products; and flat panel displays for electronic products. The company serves aerospace, architectural, automotive, and marine industries. Research Frontiers Incorporated was founded in 1965 and is headquartered in Woodbury, New York.

About InterDigital

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.

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