InterDigital Inc. Common Stock (IDCC)

FairStock Score: 48/100 — MIXED

Key Financials

Strengths

• Generates $466 million in annual free cash flow (5.0% yield on market cap)
• High return on equity of 41.5% demonstrating efficient capital deployment
• Conservative balance sheet with debt-to-equity of just 0.45, providing financial flexibility
• Altman Z-Score of 7.8 confirms minimal bankruptcy risk and strong solvency

Concerns

• Trades significantly above Graham Number ($107) with negative 239% margin of safety—limited downside protection
• Revenue declining at 37.4% year-over-year signals potential demand weakness or market share loss

AI Analysis

InterDigital Inc. Common Stock is a small-cap technology company valued at $9.3 billion. The business generates $834 million in annual revenue with a 5.2% net margin and $466 million in free cash flow. From a quality standpoint, InterDigital shows Altman Z-Score of 7.8 confirms fortress-level solvency and extraordinary 42% return on equity. On valuation, the stock is trading at a premium 30.4x earnings, with trades far above its Graham Number ($107) with no margin of safety. Growth dynamics show revenue growing at -37.4% and profit growth of -67.7%. Our composite FairStock Score of 48/100 reflects mixed fundamentals overall. Investors should weigh the business quality against the current price and their own margin of safety requirements.

Bull Case

Improving fundamentals and sector tailwinds could drive meaningful earnings growth, compressing the effective multiple for patient investors. With $466 million in annual free cash flow (5.0% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.

Bear Case

At 30x earnings, any growth disappointment triggers rapid multiple compression—a 20% earnings miss plus multiple contraction to 20x implies 40%+ downside. Regulatory changes, input cost inflation, or demand normalization represent underappreciated risks that could materially impact forward estimates.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer