Ericsson Telephone Company (ERIC): Today's Featured Telecommunications Laggard

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

Ericsson Telephone Company ( ERIC) pushed the Telecommunications industry lower today making it today's featured Telecommunications laggard. The industry as a whole closed the day down 0.2%. By the end of trading, Ericsson Telephone Company fell 12 cents (-1.3%) to $8.92 on average volume. Throughout the day, 3.5 million shares of Ericsson Telephone Company exchanged hands as compared to its average daily volume of four million shares. The stock ranged in price between $8.85-$8.99 after having opened the day at $8.96 as compared to the previous trading day's close of $9.03. Other companies within the Telecommunications industry that declined today were: Leap Wireless International ( LEAP), down 17.9%, Powerwave Technologies ( PWAV), down 12.2%, MetroPCS Communications ( PCS), down 9.8%, and Nexxus Lighting ( NEXS), down 6.7%.
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Ericsson provides communications equipment, professional services, and multimedia solutions to mobile and fixed networks operators worldwide. Ericsson Telephone Company has a market cap of $27.51 billion and is part of the technology sector. The company has a P/E ratio of 15.8, above the average telecommunications industry P/E ratio of 13.1 and below the S&P 500 P/E ratio of 17.7. Shares are down 10.8% year to date as of the close of trading on Tuesday. Currently there are three analysts that rate Ericsson Telephone Company a buy, no analysts rate it a sell, and nine rate it a hold.

TheStreet Ratings rates Ericsson Telephone Company as a hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow.

On the positive front, Phazar Corporation ( ANTP), up 20%, Maxcom Telecomunicaciones S.A.B. de C.V ( MXT), up 9.1%, CalAmp Corporation ( CAMP), up 8.5%, and Blonder Tongue Laboratories ( BDR), up 7.8%, were all gainers within the telecommunications industry with American Tower ( AMT) being today's featured telecommunications industry leader.

For investors not wanting singular stock exposure, ETFs may be of interest. Investors who are bullish on the telecommunications industry could consider iShares Dow Jones US Telecom ( IYZ) while those bearish on the telecommunications industry could consider ProShares Ult Sht Telecommunication ( TLL).

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