Heavy Volume And Pre-Market Movement For 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 $44.0 million.
  • ERIC traded 862,982 shares today in the pre-market hours as of 8:00 AM, representing 24.8% 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 2.6%. 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 4 rate it a hold.

The average volume for LM Ericsson Telephone Company has been 4.2 million shares per day over the past 30 days. LM Ericsson Telephone has a market cap of $37.4 billion and is part of the technology sector and telecommunications industry. Shares are down 5.6% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates LM Ericsson Telephone Company as a hold. 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 and largely solid financial position with reasonable debt levels by most measures. 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:
  • 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. This trend suggests that the performance of the business is improving. 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.
  • 41.60% is the gross profit margin for ERICSSON which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, ERIC's net profit margin of 4.46% significantly trails the industry average.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. When compared to other companies in the Communications Equipment industry and the overall market, ERICSSON's return on equity is below that of both the industry average and the S&P 500.
  • In its most recent trading session, ERIC has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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