Contrasting Viavi Solutions (VIAV) & Telefonaktiebolaget LM Ericsson (ERIC)

Viavi Solutions (NASDAQ: VIAV) and Telefonaktiebolaget LM Ericsson (NASDAQ:ERIC) are both technology companies, but which is the superior stock? We will contrast the two businesses based on the strength of their earnings, profitability, valuation, risk, dividends, analyst recommendations and institutional ownership.

Analyst Recommendations

This is a summary of current recommendations and price targets for Viavi Solutions and Telefonaktiebolaget LM Ericsson, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Viavi Solutions 0 2 6 0 2.75
Telefonaktiebolaget LM Ericsson 3 6 3 0 2.00

Viavi Solutions currently has a consensus price target of $11.93, indicating a potential upside of 20.13%. Telefonaktiebolaget LM Ericsson has a consensus price target of $5.49, indicating a potential downside of 18.55%. Given Viavi Solutions’ stronger consensus rating and higher probable upside, equities analysts plainly believe Viavi Solutions is more favorable than Telefonaktiebolaget LM Ericsson.

Earnings & Valuation

This table compares Viavi Solutions and Telefonaktiebolaget LM Ericsson’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Viavi Solutions $811.40 million 2.76 $166.90 million $0.13 76.38
Telefonaktiebolaget LM Ericsson $23.60 billion 0.95 -$4.13 billion ($1.35) -4.99

Viavi Solutions has higher earnings, but lower revenue than Telefonaktiebolaget LM Ericsson. Telefonaktiebolaget LM Ericsson is trading at a lower price-to-earnings ratio than Viavi Solutions, indicating that it is currently the more affordable of the two stocks.

Dividends

Telefonaktiebolaget LM Ericsson pays an annual dividend of $0.07 per share and has a dividend yield of 1.0%. Viavi Solutions does not pay a dividend. Telefonaktiebolaget LM Ericsson pays out -5.2% of its earnings in the form of a dividend.

Institutional & Insider Ownership

91.3% of Viavi Solutions shares are owned by institutional investors. Comparatively, 8.0% of Telefonaktiebolaget LM Ericsson shares are owned by institutional investors. 0.6% of Viavi Solutions shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Volatility and Risk

Viavi Solutions has a beta of 1.8, meaning that its share price is 80% more volatile than the S&P 500. Comparatively, Telefonaktiebolaget LM Ericsson has a beta of 0.92, meaning that its share price is 8% less volatile than the S&P 500.

Profitability

This table compares Viavi Solutions and Telefonaktiebolaget LM Ericsson’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Viavi Solutions 3.94% 9.60% 3.62%
Telefonaktiebolaget LM Ericsson -17.57% -11.30% -4.81%

Summary

Viavi Solutions beats Telefonaktiebolaget LM Ericsson on 13 of the 16 factors compared between the two stocks.

About Viavi Solutions

Viavi Solutions Inc. (Viavi) is a provider of network test, monitoring and assurance solutions to communications service providers, enterprises and their ecosystems. The Company also offers thin film optical coatings, providing light management solutions to anti-counterfeiting, consumer and industrial, government and healthcare and other markets. The Company’s segments include Network Enablement (NE), Service Enablement (SE), and Optical Security and Performance Products (OSP). The NE segment provides testing solutions that access the network to perform build-out and maintenance tasks. The SE segment offers solutions, which are embedded systems that yield network, service and application performance data. The OSP segment provides optical security solutions. The OSP segment’s security offerings for the currency market include Optically Variable Pigment (OVP), Optically Variable Magnetic Pigment (OVMP) and banknote thread substrates.

About Telefonaktiebolaget LM Ericsson

Telefonaktiebolaget LM Ericsson (Ericsson) provides infrastructure, services and software to the telecommunication industry and other sectors. The Company’s segments include Networks, IT & Cloud and Media. The Networks segment consists of two business units: Network Products and Network Services. The overall focus is on evolving and managing access networks, including the development of hardware and software for radio access and transport networks. The IT & Cloud business includes two business units: IT & Cloud Products and IT & Cloud Services. The focus in IT & Cloud is to help telecom operators and selected enterprises through the digital transformations ahead. It develops and delivers software-based solutions for television and media and combines a product portfolio that spans the television value chain, with systems integration and managed services. The portfolio includes compression, content publishing through set-top box or pure over-the-top, content delivery and analytics.

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