InterDigital Inc (NASDAQ:IDCC) is a global research and development company specializing in wireless, video, and AI technologies. The company licenses its innovations to manufacturers of connected devices and cloud service providers, positioning itself as a key player in the tech industry.
Louis Navellier’s The Little Book That Makes You Rich outlines eight key rules for identifying high-growth stocks. These rules focus on earnings revisions, sales growth, profitability, and financial health—factors that help investors spot companies with strong momentum and potential for long-term gains.
Why InterDigital Inc (NASDAQ:IDCC) Fits the Little Book Criteria
1. Positive Earnings Revisions
Analysts have raised EPS estimates for the next quarter by 85.4% over the past three months, signaling growing confidence in the company’s near-term performance.
2. Positive Earnings Surprises
InterDigital has beaten EPS estimates in three of the last four quarters, with an average surprise of 360.1%, demonstrating consistent outperformance.
3. Increasing Sales Growth
Revenue growth remains robust, with 58.0% year-over-year and 139.6% quarter-over-quarter increases, reflecting strong demand for its technologies.
4. Expanding Operating Margin
The operating margin has grown by 25.4% over the past year, indicating improved profitability as sales increase.
5. Strong Cash Flow
Free cash flow has risen 23.3% in the last year, providing the company with financial flexibility to reinvest in growth.
6. Earnings Growth
EPS has surged 60.5% year-over-year and 190.1% quarter-over-quarter, reinforcing the company’s strong earnings trajectory.
7. Positive Earnings Momentum
The latest quarterly EPS growth (190.1%) far exceeds the same quarter’s growth from a year ago (30.6%), showing accelerating profitability.
8. High Return on Equity
With an ROE of 41.8%, InterDigital efficiently generates profits from shareholder investments, outperforming most peers in the software industry.
Fundamental Analysis Summary
Our fundamental analysis report rates InterDigital Inc (NASDAQ:IDCC) at 7 out of 10, highlighting strong profitability, solid financial health, and reasonable valuation. Key strengths include:
- High Margins: Operating margin of 50.6% and profit margin of 41.3% place it among industry leaders.
- Strong Balance Sheet: Low debt levels and a healthy Altman-Z score (6.11) suggest financial stability.
- Growth Track Record: Past revenue and EPS growth have been impressive, though future estimates show some moderation.
While the stock is attractively valued compared to peers, investors should consider potential headwinds, including expected declines in future earnings growth.
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