Ericsson (NASDAQ: ERIC) is one of 67 publicly-traded companies in the “Communications & Networking” industry, but how does it contrast to its rivals? We will compare Ericsson to related businesses based on the strength of its earnings, profitability, valuation, risk, analyst recommendations, institutional ownership and dividends.

Dividends

Ericsson pays an annual dividend of $0.07 per share and has a dividend yield of 1.2%. Ericsson pays out -15.2% of its earnings in the form of a dividend. As a group, “Communications & Networking” companies pay a dividend yield of 2.0% and pay out 40.9% of their earnings in the form of a dividend.

Insider and Institutional Ownership

8.0% of Ericsson shares are held by institutional investors. Comparatively, 64.0% of shares of all “Communications & Networking” companies are held by institutional investors. 13.4% of shares of all “Communications & Networking” companies are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Profitability

This table compares Ericsson and its rivals’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ericsson -6.40% -3.16% -1.48%
Ericsson Competitors -1.68% -6.44% 0.52%

Analyst Ratings

This is a breakdown of current ratings for Ericsson and its rivals, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ericsson 0 13 4 0 2.24
Ericsson Competitors 472 2687 4044 194 2.54

Ericsson presently has a consensus target price of $5.95, suggesting a potential upside of 3.30%. As a group, “Communications & Networking” companies have a potential upside of 27.51%. Given Ericsson’s rivals stronger consensus rating and higher possible upside, analysts clearly believe Ericsson has less favorable growth aspects than its rivals.

Risk & Volatility

Ericsson has a beta of 1.06, meaning that its stock price is 6% more volatile than the S&P 500. Comparatively, Ericsson’s rivals have a beta of 1.17, meaning that their average stock price is 17% more volatile than the S&P 500.

Earnings & Valuation

This table compares Ericsson and its rivals top-line revenue, earnings per share and valuation.

Gross Revenue EBITDA Price/Earnings Ratio
Ericsson $26.64 billion $906.80 million -12.52
Ericsson Competitors $2.87 billion $625.83 million 26.52

Ericsson has higher revenue and earnings than its rivals. Ericsson is trading at a lower price-to-earnings ratio than its rivals, indicating that it is currently more affordable than other companies in its industry.

Summary

Ericsson rivals beat Ericsson on 10 of the 14 factors compared.

About Ericsson

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.

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