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

Zacks Equity Research
·3-min read

Ericsson (ERIC) closed at $9.67 in the latest trading session, marking a -1.73% move from the prior day. This move lagged the S&P 500's daily loss of 0.34%. At the same time, the Dow added 0.05%, and the tech-heavy Nasdaq lost 0.69%.

Investors will be hoping for strength from ERIC as it approaches its next earnings release. In that report, analysts expect ERIC to post earnings of $0.08 per share. This would mark year-over-year growth of 33.33%. Meanwhile, our latest consensus estimate is calling for revenue of $5.43 billion, down 6.45% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $0.51 per share and revenue of $23.37 billion, which would represent changes of +363.64% and -2.62%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for ERIC. These recent revisions tend to reflect the evolving nature of short-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

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Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. ERIC is currently a Zacks Rank #2 (Buy).

Investors should also note ERIC's current valuation metrics, including its Forward P/E ratio of 19.49. Its industry sports an average Forward P/E of 21.85, so we one might conclude that ERIC is trading at a discount comparatively.

Also, we should mention that ERIC has a PEG ratio of 0.75. 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 industry currently had an average PEG ratio of 2.2 as of yesterday's close.

The Wireless Equipment industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 78, which puts it in the top 31% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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Zacks Investment Research