Financial Contrast: Telefonaktiebolaget LM Ericsson (ERIC) vs. ViaSat (VSAT)

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

Analyst Recommendations

This is a breakdown of current ratings and price targets for Telefonaktiebolaget LM Ericsson and ViaSat, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Telefonaktiebolaget LM Ericsson 3 6 3 0 2.00
ViaSat 1 5 4 0 2.30

Telefonaktiebolaget LM Ericsson currently has a consensus price target of $5.49, suggesting a potential downside of 17.57%. ViaSat has a consensus price target of $74.11, suggesting a potential upside of 4.75%. Given ViaSat’s stronger consensus rating and higher probable upside, analysts clearly believe ViaSat is more favorable than Telefonaktiebolaget LM Ericsson.

Dividends

Telefonaktiebolaget LM Ericsson pays an annual dividend of $0.07 per share and has a dividend yield of 1.1%. ViaSat does not pay a dividend. Telefonaktiebolaget LM Ericsson pays out -5.2% of its earnings in the form of a dividend.

Profitability

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

Net Margins Return on Equity Return on Assets
Telefonaktiebolaget LM Ericsson -17.57% -11.30% -4.81%
ViaSat -2.59% -1.13% -0.65%

Insider and Institutional Ownership

8.4% of Telefonaktiebolaget LM Ericsson shares are held by institutional investors. Comparatively, 99.4% of ViaSat shares are held by institutional investors. 7.7% of ViaSat shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Risk & Volatility

Telefonaktiebolaget LM Ericsson has a beta of 0.92, indicating that its share price is 8% less volatile than the S&P 500. Comparatively, ViaSat has a beta of 0.8, indicating that its share price is 20% less volatile than the S&P 500.

Valuation and Earnings

This table compares Telefonaktiebolaget LM Ericsson and ViaSat’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Telefonaktiebolaget LM Ericsson $23.60 billion 0.94 -$4.13 billion ($1.35) -4.93
ViaSat $1.56 billion 2.67 $23.76 million ($0.71) -99.65

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

Summary

ViaSat beats Telefonaktiebolaget LM Ericsson on 11 of the 16 factors compared between the two stocks.

Telefonaktiebolaget LM Ericsson Company Profile

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.

ViaSat Company Profile

ViaSat, Inc. is engaged in broadband technologies and services. The Company operates through three segments: satellite services, commercial networks and government systems. The satellite services segment provides satellite-based broadband services to consumers, enterprises, commercial airlines and mobile broadband customers primarily in the United States. The commercial networks segment develops and produces a range of end-to-end satellite and wireless communication systems, ground networking equipment and space-to-earth connectivity systems. The government systems segment develops and produces network-centric Internet Protocol (IP)-based fixed and mobile secure government communications systems, products, services and solutions, which are designed to enable the collection and dissemination of real-time digital information between command centers, communications nodes and air defense systems.

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