Heavy Early Morning Activity On LM Ericsson Telephone Company (ERIC)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified LM Ericsson Telephone Company ( ERIC) as a pre-market mover with heavy volume candidate. In addition to specific proprietary factors, Trade-Ideas identified LM Ericsson Telephone Company 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 $36.4 million.
  • ERIC traded 7.2 million shares today in the pre-market hours as of 8:49 AM, representing 244.1% of its average daily volume.

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More details on ERIC:

Ericsson provides telecommunications equipment and services to mobile and fixed network operators worldwide. It operates through four segments: Networks, Global Services, Support Solutions, and Modems. The stock currently has a dividend yield of 2.5%. ERIC has a PE ratio of 15.8. Currently there are 5 analysts that rate LM Ericsson Telephone Company a buy, 1 analyst rates it a sell, and 3 rate it a hold.

The average volume for LM Ericsson Telephone Company has been 4.1 million shares per day over the past 30 days. LM Ericsson Telephone has a market cap of $40.0 billion and is part of the technology sector and telecommunications industry. Shares are down 1.2% 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 Company as a buy. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and good cash flow from operations. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the ratings report include:
  • ERICSSON reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, ERICSSON increased its bottom line by earning $0.58 versus $0.28 in the prior year. This year, the market expects an improvement in earnings ($0.79 versus $0.58).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Communications Equipment industry. The net income increased by 77.4% when compared to the same quarter one year prior, rising from $184.59 million to $327.41 million.
  • Although ERIC's debt-to-equity ratio of 0.17 is very low, it is currently higher than that of the industry average. To add to this, ERIC has a quick ratio of 1.60, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Net operating cash flow has significantly increased by 419.15% to $1,452.05 million when compared to the same quarter last year. In addition, ERICSSON has also vastly surpassed the industry average cash flow growth rate of -10.84%.

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