Why Ericsson (ERIC) Stock Is Down In Pre-Market Trading Today

NEW YORK (TheStreet) -- Ericsson (ERIC) shares are down -1.2% to $11.95 in pre-market trading on Thursday after having coverage initiated with a "hold" rating by analysts at Jefferies  (JEF).

The firm believes that the company remains in transition following comments made by CEO Jean-Cleade Geha stating that the company was in negotiations to manage Verizon (VZ) and AT&T's (T) wireless networks. 

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TheStreet Ratings team rates ERICSSON as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate ERICSSON (ERIC) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. 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 analysis by TheStreet Ratings Team goes as follows:

  • 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 -10.85%.
  • You can view the full analysis from the report here: ERIC Ratings Report
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