ARRIS International (ARRS) versus Telefonaktiebolaget LM Ericsson (ERIC) Head to Head Review

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

Valuation and Earnings

This table compares ARRIS International and Telefonaktiebolaget LM Ericsson’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
ARRIS International $6.61 billion 0.68 $92.02 million $2.43 10.30
Telefonaktiebolaget LM Ericsson $23.60 billion 1.26 -$4.13 billion ($0.47) -18.98

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

Risk and Volatility

ARRIS International has a beta of 1.23, suggesting that its stock price is 23% more volatile than the S&P 500. Comparatively, Telefonaktiebolaget LM Ericsson has a beta of 0.77, suggesting that its stock price is 23% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent recommendations for ARRIS International and Telefonaktiebolaget LM Ericsson, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
ARRIS International 1 3 3 0 2.29
Telefonaktiebolaget LM Ericsson 1 7 3 0 2.18

ARRIS International presently has a consensus price target of $29.29, suggesting a potential upside of 16.96%. Telefonaktiebolaget LM Ericsson has a consensus price target of $8.18, suggesting a potential downside of 8.35%. Given ARRIS International’s stronger consensus rating and higher possible upside, equities analysts plainly believe ARRIS International is more favorable than Telefonaktiebolaget LM Ericsson.

Profitability

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

Net Margins Return on Equity Return on Assets
ARRIS International 1.83% 16.82% 7.09%
Telefonaktiebolaget LM Ericsson -9.26% -0.43% -0.16%

Insider and Institutional Ownership

87.4% of ARRIS International shares are held by institutional investors. Comparatively, 8.2% of Telefonaktiebolaget LM Ericsson shares are held by institutional investors. 0.9% of ARRIS International shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Dividends

Telefonaktiebolaget LM Ericsson pays an annual dividend of $0.07 per share and has a dividend yield of 0.8%. ARRIS International does not pay a dividend. Telefonaktiebolaget LM Ericsson pays out -14.9% of its earnings in the form of a dividend.

Summary

ARRIS International beats Telefonaktiebolaget LM Ericsson on 11 of the 15 factors compared between the two stocks.

ARRIS International Company Profile

ARRIS International plc, together with its subsidiaries, provides entertainment, communications, and networking technology and solutions worldwide. It operates through three segments: Customer Premises Equipment, Network & Cloud, and Enterprise Networks. The Customer Premises Equipment segment offers digital subscriber lines and cable modems, broadband gateways, set-top boxes, and video gateways. The Network & Cloud segment provides cable modem termination system, converged cable access platform, passive optical network, service provider and programmer equipment, Ad insertion technologies, and equipment in the ground or on transmission poles, as well as equipment used to initiate the distribution of content-carrying signals. This segment also offers technical support and professional services; software products that enable providers to deliver content and advertising services; network management products that collect information from the broadband network; and customer experience management solutions, as well as network surveillance and issue correlation software and services. The Enterprise Networks segment provides wired Ethernet switches; and indoor, outdoor, and special-purpose Wi-Fi access points, as well as accessories, such as antennas. This segment also offers SmartCell Insight, a big data Wi-Fi analytics and reporting platform; ZonePlanner, a Wi-Fi planning and modeling software; Smart Positioning Technology, a cloud-based smart Wi-Fi location-based services platform; Cloudpath Wi-Fi device; mobile apps for controllers, cloud Wi-Fi, location, and performance testing; Ruckus Cloud Wi-Fi, a wireless local area network management-as-a-service; and ZoneDirector, a smart Wi-Fi controller. The company was formerly known as ARRIS Group, Inc. and changed its name to ARRIS International plc in January 2016. ARRIS International plc was founded in 1969 and is headquartered in Suwanee, Georgia.

Telefonaktiebolaget LM Ericsson Company Profile

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.

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