InterDigital: Zacks’ Bull of the Day Play

InterDigital (IDCCSnapshot Report) is at the forefront of wireless innovation.  The company recently announced that they have been invited to join the 5G Forum as a member.  This non-profit organization is researching 5G technology and services in Asia.  Further, InterDigital has been participating in Europe’s, European Union Initiatives for the rollout of 5G infrastructures throughout Europe.  Moreover, InterDigital has met or beat the Zacks Consensus Earnings and Revenue estimates for the past three quarters.  Due to these strong factors, InterDigital has become the Zacks Bull of the Day.

This Zacks Ranked #1 (Strong Buy) company 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, such as 2G, 3G, 4G, and IEEE 802-related products and networks.  Their patented technologies are used in various products, including mobile devices, such as cellular phones, tablets, notebook computers, and wireless personal digital assistants, wireless infrastructure equipment comprising base stations, and components, dongles, and modules for wireless devices.

In their most recent quarter, InterDigital saw total revenues increase 47.6%.  These revenues all came from reoccurring revenue, representing an increase of 96% y/y.  Management was able to decrease intellectual property enforcement expenses by 32% y/y.  Further, management was able to increase ending cash and short-term investments to $911.2 million, enabling them to further pursue any new deals.  Finally, management announced an additional $100 million for their share buy-back program, bringing their current total repurchase funds to $179.8 million, or just about 8% of total shares currently outstanding.

Increasing Estimates

The graph below shows InterDigital’s historic Price and EPS surprise.  As you can see these positive announcements have caused significant price appreciation.  InterDigital has posted a four quarter average positive earnings surprise of 17.43%, indicating that not only do they beat the earnings estimates they crush them.

Over the past 30 days, estimates for InterDigital have increased for Q2 15, Q3 15, FY 15, and FY 16; Q2 15 jumped up from $0.58 to $0.81, Q3 15 rose from $0.49 to $0.54, FY 15 increased from $2.35 to $2.62, and FY 16 rose from $2.36 to $2.59.

Bottom Line

This mobile technology company is uniquely positioned in the 5G, and wireless market.  This position has enabled the company to post revenue growth, and declining enforcement expenses.  These positives coupled with their massive share repurchase program have this company poised for long term future growth.

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