International Business Machines Corp. (IBM), Microsoft Corporation (MSFT): Should We Follow Icahn Into Nuance Communications Inc. (NUAN)?

In terms of profitability, Nuance is the least profitable company, generating the lowest operating margin at 10.7%, while the operating margin of International Business Machines Corp. (NYSE:IBM) is two times higher at 21.2%. Microsoft Corporation (NASDAQ:MSFT) has the highest operating margin at 22.6%. Nuance also generated the lowest return on invested capital at only 2.5%. Microsoft ranked second with an 18.6% return on invested capital. International Business Machines Corp. (NYSE:IBM) looks the most interesting with the highest ROIC at 31.4%.

My Foolish take

Even with Icahn’s recent stake accumulation in Nuance, I am personally not excited about this company due to its high EV multiple and negative tangible book value. Long-term investors might invest in International Business Machines Corp. (NYSE:IBM) for its high return on invested capital. Microsoft Corporation (NASDAQ:MSFT) might be the most suitable for income investors as it has the highest dividend yield at 3.2%.

The article Should We Follow Icahn Into This Voice Solutions Provider? originally appeared on Fool.com and is written by Anh HOANG.

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