Contrasting Ericsson (ERIC) & West Corporation (WSTC)
Ericsson (NASDAQ: ERIC) and West Corporation (NASDAQ:WSTC) are both computer and technology companies, but which is the superior stock? We will contrast the two businesses based on the strength of their earnings, profitability, valuation, risk, dividends, analyst recommendations and institutional ownership.
Institutional & Insider Ownership
8.0% of Ericsson shares are owned by institutional investors. Comparatively, 67.4% of West Corporation shares are owned by institutional investors. 4.6% of West Corporation shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.
This is a summary of current recommendations and price targets for Ericsson and West Corporation, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Ericsson currently has a consensus price target of $5.95, indicating a potential upside of 3.30%. West Corporation has a consensus price target of $24.50, indicating a potential upside of 4.79%. Given West Corporation’s higher probable upside, analysts plainly believe West Corporation is more favorable than Ericsson.
Ericsson pays an annual dividend of $0.07 per share and has a dividend yield of 1.2%. West Corporation pays an annual dividend of $0.45 per share and has a dividend yield of 1.9%. Ericsson pays out -15.2% of its earnings in the form of a dividend. West Corporation pays out 17.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.
This table compares Ericsson and West Corporation’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Volatility and Risk
Ericsson has a beta of 1.06, meaning that its share price is 6% more volatile than the S&P 500. Comparatively, West Corporation has a beta of 1.59, meaning that its share price is 59% more volatile than the S&P 500.
Valuation & Earnings
This table compares Ericsson and West Corporation’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Ericsson||$26.64 billion||0.71||$906.80 million||($0.46)||-12.52|
|West Corporation||$2.29 billion||0.85||$636.33 million||$2.51||9.31|
Ericsson has higher revenue and earnings than West Corporation. Ericsson is trading at a lower price-to-earnings ratio than West Corporation, indicating that it is currently the more affordable of the two stocks.
West Corporation beats Ericsson on 9 of the 15 factors compared between the two stocks.
Ericsson Company Profile
Telefonaktiebolaget LM Ericsson (Ericsson) provides infrastructure, services and software to the telecommunication industry and other sectors. The Company’s segments include Networks, IT & Cloud and Media. The Networks segment consists of two business units: Network Products and Network Services. The overall focus is on evolving and managing access networks, including the development of hardware and software for radio access and transport networks. The IT & Cloud business includes two business units: IT & Cloud Products and IT & Cloud Services. The focus in IT & Cloud is to help telecom operators and selected enterprises through the digital transformations ahead. It develops and delivers software-based solutions for television and media and combines a product portfolio that spans the television value chain, with systems integration and managed services. The portfolio includes compression, content publishing through set-top box or pure over-the-top, content delivery and analytics.
West Corporation Company Profile
West Corporation is a provider of communication and network infrastructure services. The Company helps its clients communicate, collaborate and connect with their audiences through a portfolio of solutions that include unified communications services, safety services, and interactive services, such as automated notifications, specialized agent services and telecom services. The Company’s segments include Unified Communications Services, which includes collaboration services, Unified Communications as a Service (UCaaS) and telecom services; Safety Services, which includes carrier services, government solutions and advanced services; Interactive Services, including outbound (proactive notifications-voice, text/short messaging service (SMS) and chat), inbound speech solutions (interactive voice response or IVR), Web, mobile and professional services, and Specialized Agent Services, which includes healthcare advocacy services, cost management services and revenue generation.
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