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Ericsson (ERIC) Dips More Than Broader Markets: What You Should Know

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Ericsson (ERIC - Free Report) closed the most recent trading day at $4.91, moving -1.8% from the previous trading session. This change lagged the S&P 500's 1.47% loss on the day. At the same time, the Dow lost 1.14%, and the tech-heavy Nasdaq lost 1.57%.

Prior to today's trading, shares of the telecommunications equipment provider had 0% over the past month. This has was narrower than the Computer and Technology sector's loss of 1.46% and the S&P 500's loss of 1.43% in that time.

Ericsson will be looking to display strength as it nears its next earnings release. In that report, analysts expect Ericsson to post earnings of $0.07 per share. This would mark a year-over-year decline of 56.25%. Our most recent consensus estimate is calling for quarterly revenue of $6.39 billion, down 1.04% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $0.31 per share and revenue of $26.42 billion, which would represent changes of -49.18% and -1.19%, respectively, from the prior year.

Any recent changes to analyst estimates for Ericsson should also be noted by investors. These revisions help to show the ever-changing nature of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. Ericsson currently has a Zacks Rank of #3 (Hold).

Investors should also note Ericsson's current valuation metrics, including its Forward P/E ratio of 15.92. For comparison, its industry has an average Forward P/E of 12.93, which means Ericsson is trading at a premium to the group.

It is also worth noting that ERIC currently has a PEG ratio of 7.81. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Wireless Equipment was holding an average PEG ratio of 1.33 at yesterday's closing price.

The Wireless Equipment industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 94, putting it in the top 38% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

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