Head-To-Head Survey: Telefonaktiebolaget LM Ericsson (ERIC) vs. Harmonic (HLIT)

Telefonaktiebolaget LM Ericsson (NASDAQ: ERIC) and Harmonic (NASDAQ:HLIT) are both computer and technology companies, but which is the better stock? We will compare the two companies based on the strength of their risk, valuation, dividends, analyst recommendations, profitability, institutional ownership and earnings.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Telefonaktiebolaget LM Ericsson and Harmonic, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Telefonaktiebolaget LM Ericsson 2 8 2 0 2.00
Harmonic 0 2 2 0 2.50

Telefonaktiebolaget LM Ericsson presently has a consensus price target of $5.91, indicating a potential downside of 22.00%. Harmonic has a consensus price target of $5.33, indicating a potential upside of 33.33%. Given Harmonic’s stronger consensus rating and higher possible upside, analysts clearly believe Harmonic is more favorable than Telefonaktiebolaget LM Ericsson.

Institutional and Insider Ownership

8.7% of Telefonaktiebolaget LM Ericsson shares are owned by institutional investors. Comparatively, 88.8% of Harmonic shares are owned by institutional investors. 6.2% of Harmonic shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares Telefonaktiebolaget LM Ericsson and Harmonic’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Telefonaktiebolaget LM Ericsson $23.60 billion 1.07 -$4.13 billion ($0.47) -16.13
Harmonic $358.25 million 0.95 -$82.95 million ($0.54) -7.41

Harmonic has lower revenue, but higher earnings than Telefonaktiebolaget LM Ericsson. Telefonaktiebolaget LM Ericsson is trading at a lower price-to-earnings ratio than Harmonic, 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 0.9%. Harmonic does not pay a dividend. Telefonaktiebolaget LM Ericsson pays out -14.9% of its earnings in the form of a dividend.

Volatility & Risk

Telefonaktiebolaget LM Ericsson has a beta of 0.79, meaning that its stock price is 21% less volatile than the S&P 500. Comparatively, Harmonic has a beta of 0.8, meaning that its stock price is 20% less volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
Telefonaktiebolaget LM Ericsson -12.75% -4.58% -1.86%
Harmonic -19.87% -14.52% -6.34%

Summary

Telefonaktiebolaget LM Ericsson beats Harmonic on 8 of the 15 factors compared between the two stocks.

About Telefonaktiebolaget LM Ericsson

Telefonaktiebolaget LM Ericsson (publ) provides information and communications technology solutions for networks, IT and cloud, and media markets worldwide. It operates through four segments: Networks, Digital Services, Managed Services, and Other. The Networks segment provides mobile radio access networks, transport solutions, and site solutions, as well as related services, such as network rollout, network tuning, and customer support. The Digital Services segment offers products and services for service providers in the areas of operations support systems and business support systems; packet core and communication; network functions virtualization and cloud infrastructure; application development and modernization; and consulting services. The Managed Services segment provides vendor agnostic services, including networks and IT managed, and network design and optimization services to manage service provider's networks. Telefonaktiebolaget LM Ericsson (publ) was founded in 1876 and is headquartered in Stockholm, Sweden.

About Harmonic

Harmonic Inc. designs, manufactures, and sells video infrastructure products and system solutions worldwide. Its products enable customers to create, prepare, and deliver a range of video and broadband services to consumer devices, including televisions, personal computers, laptops, tablets, and smart phones. The company operates in two segments, Video and Cable Edge. The Video segment sells video processing, and production and playout solutions and services to cable operators, and satellite and telecommunications Pay-TV service providers, as well as to broadcast and media companies, including streaming new media companies. This segment's video processing solutions include network management and application software, and hardware products, such as cloud media processing, broadcast and distribution encoders, contribution encoders, multiscreen transcoders and stream processing systems, multiscreen delivery, decoders and descramblers, and video servers. This segment also provides video-optimized storage systems; and unified video playout and processing software-as-a-service solutions. The Cable Edge segment offers cable edge solutions and related services, including CableOS software-based converged cable access platform solutions; and narrowcast services gateway products primarily to cable operators. The company also provides technical support and professional services, such as maintenance and support, consulting, implementation, program management, technical design and planning, building and site preparation, integration and equipment installation, system testing, and training. Harmonic Inc. sells its products through its direct sales force, as well as through independent resellers and systems integrators. The company was founded in 1988 and is headquartered in San Jose, California.

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