Ericsson (ERIC) Stock Rising After Dispelling Cisco Acquisition Rumors
NEW YORK (TheStreet) -- Ericsson (ERIC) - Get Report stock is up 3.03% to $9.52 on heavy trading volume on Monday, after the company responded to speculation that Cisco Systems (CSCO) could acquire the company.
Last week, the Swedish communications technology company announced a partnership with Cisco to collaborate on service providers and the enterprise segment,
"The talks leading up to the partnership announcement have been ongoing for a year and there have not been any discussions whatsoever on a merger or an acquisition," CEO Hans Vestberg said in a statement today.
A Cisco spokesperson also told Bloomberg last week that the networking equipment provider was not interested in trying to buy Ericsson.
So far today, 5.01 million shares of Ericsson have traded, versus its 30-day average of 3.44 million shares.
Separately, TheStreet Ratings team rates ERICSSON as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
We rate ERICSSON (ERIC) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- ERIC's revenue growth has slightly outpaced the industry average of 9.1%. Since the same quarter one year prior, revenues slightly increased by 0.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- ERIC's debt-to-equity ratio is very low at 0.19 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.45, which illustrates the ability to avoid short-term cash problems.
- ERIC has underperformed the S&P 500 Index, declining 21.68% from its price level of one year ago.
- 38.55% is the gross profit margin for ERICSSON which we consider to be strong. Regardless of ERIC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ERIC's net profit margin of 5.25% is significantly lower than the industry average.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Communications Equipment industry and the overall market on the basis of return on equity, ERICSSON has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- You can view the full analysis from the report here: ERIC
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.