LM Ericsson Telephone (ERIC) Showing Signs Of A Dead Cat Bounce Today

Trade-Ideas LLC identified LM Ericsson Telephone (ERIC) as a "dead cat bounce" (down big yesterday but up big today) candidate
By TheStreet Wire ,

Trade-Ideas LLC identified

LM Ericsson Telephone

(

ERIC

) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified LM Ericsson Telephone as such a stock due to the following factors:

  • ERIC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $27.6 million.
  • ERIC has traded 3.6 million shares today.
  • ERIC is up 3.1% today.
  • ERIC was down 6.1% yesterday.

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More details on ERIC:

Telefonaktiebolaget LM Ericsson (publ) provides network equipment and software, and services for network and business operations worldwide. Its Networks segment delivers products and solutions for mobile access, Internet protocol (IP) and transmission networks, core networks, and cloud. The stock currently has a dividend yield of 4%. Currently there are no analysts that rate LM Ericsson Telephone a buy, 1 analyst rates it a sell, and 7 rate it a hold.

The average volume for LM Ericsson Telephone has been 4.0 million shares per day over the past 30 days. LM Ericsson Telephone has a market cap of $24.6 billion and is part of the technology sector and telecommunications industry. Shares are down 26.3% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates LM Ericsson Telephone as a

hold

. 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 impressive record of earnings per share growth. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.

Highlights from the ratings report include:

  • ERIC's revenue growth has slightly outpaced the industry average of 0.2%. Since the same quarter one year prior, revenues slightly increased by 3.9%. 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 0.17 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, ERIC has a quick ratio of 1.54, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength 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.
  • 37.95% 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 3.76% is significantly lower than the industry average.
  • ERIC's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 25.74%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.

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