Hi all, happy Monday! I'm seeking to diversify my portfolio and also wanted to break up the SPY, QQQ, NVDA, MSFT chains that always seem to develop here with a company that is less discussed. Ericsson (ticker ERIC) is a communication infrastructure company based in Stockholm currently trading at $5.12 per share at market close. I've been reading up on the company and its expected performance and it seems somewhat positive.
There are 3 factors that seem to be the primary considerations (this includes my takeaways from the articles, and is not purely fact):
- Earnings Strength – While the EPS has decreased from $0.73 to an estimated $0.48 over the past year or so, analyst forecasts have been raised after the company beat their expected Q1 earnings by $0.06.
- Relative Valuation – The consensus across all the reports I've read are evenly split between a neutral rating on valuation or a positive one. Generally speaking, its current valuation is not quite where it should be, with the general expectation being that it should be valued at $1-$2 higher.
- Price Movement – This is one of the strongest indicators that has drawn my attention. The YTD price of the stock has dropped by 32.4%, with a 1-quarter down of 5.1%. The 1-month decline has slowed even more to 3.3%. There is a mix of conclusions here, either the value is bottoming out and will start to climb, or will lead to average price performance over the next few months.
In my opinion, ERIC seems to be a reasonable, undervalued stock that could prove to be a good short-term holding. What are your thoughts? (I'm still pretty new to investing in general, so constructive feedback on the way I've analyzed this would be greatly appreciated!)
Sources:
ISS-EVA Report: https://research2.fidelity.com/fidelity/research/reports/pdf/getReport.asp?feedID=1239&docTag=ERIC&versionTag=20230724
REFINITIV Report: https://research2.fidelity.com/fidelity/research/reports/pdf/getReport.asp?feedID=7427&docTag=29482160&versionTag=20230722
Ford Equity Research Report: https://research2.fidelity.com/fidelity/research/reports/pdf/getReport.asp?feedID=130&docTag=ERIC&versionTag=20230721
Refinitiv/Versus Report: https://research2.fidelity.com/fidelity/research/reports/pdf/getReport.asp?feedID=165&docTag=R615_ERIC-O&versionTag=3Q25JTL8LN5A9TG3P5D77M6HG8
McLean Capital Research Report: https://research2.fidelity.com/fidelity/research/reports/pdf/getReport.asp?feedID=2413&docTag=ERIC_20230721&versionTag=4FSQ3DCITD1CELDB3H7M32RF54
Disclosures:
Positions held in Intel, Cisco, Qualcomm, AT&T
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