Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC) and QUALCOMM (NASDAQ:QCOM) are both large-cap computer and technology companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, risk, profitability, valuation, analyst recommendations, dividends and institutional ownership.
Earnings and Valuation
This table compares Telefonaktiebolaget LM Ericsson (publ) and QUALCOMM's revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| Telefonaktiebolaget LM Ericsson (publ) | $24.04 billion | 1.95 | $235.19 million | $0.11 | 127.73 |
| QUALCOMM | $23.53 billion | 6.67 | $5.20 billion | $3.34 | 41.38 |
QUALCOMM has lower revenue, but higher earnings than Telefonaktiebolaget LM Ericsson (publ). QUALCOMM is trading at a lower price-to-earnings ratio than Telefonaktiebolaget LM Ericsson (publ), indicating that it is currently the more affordable of the two stocks.
Dividends
Telefonaktiebolaget LM Ericsson (publ) pays an annual dividend of $0.16 per share and has a dividend yield of 1.1%. QUALCOMM pays an annual dividend of $2.60 per share and has a dividend yield of 1.9%. Telefonaktiebolaget LM Ericsson (publ) pays out 145.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. QUALCOMM pays out 77.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. QUALCOMM has raised its dividend for 1 consecutive years. QUALCOMM is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Profitability
This table compares Telefonaktiebolaget LM Ericsson (publ) and QUALCOMM's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| Telefonaktiebolaget LM Ericsson (publ) | 6.35% | 20.57% | 5.91% |
| QUALCOMM | 22.09% | 90.74% | 11.56% |
Risk and Volatility
Telefonaktiebolaget LM Ericsson (publ) has a beta of 0.47, meaning that its stock price is 53% less volatile than the S&P 500. Comparatively, QUALCOMM has a beta of 1.34, meaning that its stock price is 34% more volatile than the S&P 500.
Analyst Ratings
This is a summary of current recommendations for Telefonaktiebolaget LM Ericsson (publ) and QUALCOMM, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| Telefonaktiebolaget LM Ericsson (publ) | 0 | 2 | 14 | 0 | 2.88 |
| QUALCOMM | 1 | 9 | 19 | 1 | 2.67 |
Telefonaktiebolaget LM Ericsson (publ) presently has a consensus target price of $14.50, suggesting a potential upside of 3.42%. QUALCOMM has a consensus target price of $163.72, suggesting a potential upside of 18.91%. Given QUALCOMM's higher possible upside, analysts plainly believe QUALCOMM is more favorable than Telefonaktiebolaget LM Ericsson (publ).
Insider & Institutional Ownership
8.8% of Telefonaktiebolaget LM Ericsson (publ) shares are owned by institutional investors. Comparatively, 74.8% of QUALCOMM shares are owned by institutional investors. 0.1% of QUALCOMM shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.
Summary
QUALCOMM beats Telefonaktiebolaget LM Ericsson (publ) on 16 of the 18 factors compared between the two stocks.
