Home / Street Sector / Analysts Opinion Over Profitability Valuation: Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC), TE Connectivity Ltd. (NYSE:TEL)

Analysts Opinion Over Profitability Valuation: Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC), TE Connectivity Ltd. (NYSE:TEL)

Waking on tracing line of previous stocks, Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC) also making a luring appeal, share price swings at $4.94 with percentage change of -1.00% in most recent trading session.

Ericsson (ERIC) is recently holding its yearly Investor Update event in New York. The firm is reporting on its strategy implementation for faster business execution based on its new firm structure with three sections: Networks, IT & Cloud, and Media. The new structure was implemented on July 1, 2016.

Jan Frykhammar, President and CEO, Ericsson says: “We are forcefully executing our strategy to drive incremental profit improvements through greater efficiency, monetizing our installed base in Networks and building new income base in IT & Cloud and Media. Current focus is on speed, efficiency and fine tuning of strategy execution.”

Profitability Valuation

The profit margin can answer significantly to find consistent trends in a firm’s earnings, the Co has positive 4.50% profit margin that indicates every dollar of sales a firm actually keeps in earnings, and the larger number indicates improving and vise worse. Gross profit margin, operating profit margin are its sub parts that firm has 33.60% and 7.60% respectively. Moving toward returns ratio, ERIC has returns on investment of 9.10% which indicates firm’s investment efficiency or to compare the efficiency of a number of different investments.

While returns on assets calculated as 3.70% hat gives an idea about how efficient management is at using its assets to generate earnings. It has returns on equity of 7.40%, which is measuring a corporation’s profitability by revealing how much profit generates by ERIC with the shareholders’ money. The firm attains analyst recommendation of 3.20 on scale of 1-5 with week’s performance of -0.20%.

Moving toward ratio analysis, it has current ratio of 2.00 and quick ratio was calculated as 1.60. The debt to equity ratio appeared as 0.20 for seeing its liquidity position. The firm attains analyst recommendation of 3.20 out of 1-5 scale with week’s performance of -0.20%.

Moving on tracing line, TE Connectivity Ltd. (NYSE:TEL) need to consider for profitability analysis, in latest session share price swings at $65.95 with percentage change of 0.92%.

The Co has positive 16.90% profit margin to find consistent trends in a firm’s earnings. Gross profit margin and operating profit margin are its sub parts that firm have 32.80% and 16.00% respectively. TEL has returns on investment of 21.40%. The returns on assets was 11.10% that gives an idea about how efficient management is at using its assets to generate earnings. It has returns on equity of 24.60%, which is measuring profitability by disclosing how much profit generates by TEL with the shareholders’ money.

The firm attains analyst recommendation of 2.20 on scale of 1-5 with week’s performance of 4.82%. The firm current ratio calculated as 1.60, this value is acceptable if it lies in 1.3% to 3%. But its varies industry to industry. To strengthen these views, active industry firm has Quick Ratio of 1.00, which indicates firm has sufficient short-term assets to cover its immediate liabilities. In addition, the firm has debt to equity ratio of 0.48, sometimes its remain same with long term debt to equity ratio.

 

About Richard Avery

He is a capital projects manager and process design engineer at a large-cap company. He has renowned MBA degree. Before joining SWR, he was a freelance writer for renounce tech websites. He is currently studying for CFP exam. Interests: Tech stocks, Economic Markets, Blue-chips.

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