QUALCOMM (NASDAQ: QCOM) and Telefonaktiebolaget LM Ericsson (NASDAQ:ERIC) are both large-cap computer and technology companies, but which is the superior business? We will compare the two businesses based on the strength of their valuation, institutional ownership, dividends, risk, earnings, analyst recommendations and profitability.
Risk and Volatility
QUALCOMM has a beta of 1.35, meaning that its stock price is 35% more volatile than the S&P 500. Comparatively, Telefonaktiebolaget LM Ericsson has a beta of 0.84, meaning that its stock price is 16% less volatile than the S&P 500.
This table compares QUALCOMM and Telefonaktiebolaget LM Ericsson’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Telefonaktiebolaget LM Ericsson||-17.57%||-11.30%||-4.81%|
Insider & Institutional Ownership
78.0% of QUALCOMM shares are owned by institutional investors. Comparatively, 8.3% of Telefonaktiebolaget LM Ericsson shares are owned by institutional investors. 0.2% of QUALCOMM shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
QUALCOMM pays an annual dividend of $2.28 per share and has a dividend yield of 4.1%. Telefonaktiebolaget LM Ericsson pays an annual dividend of $0.07 per share and has a dividend yield of 1.1%. QUALCOMM pays out -80.3% of its earnings in the form of a dividend. Telefonaktiebolaget LM Ericsson pays out -5.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. QUALCOMM has raised its dividend for 7 consecutive years. QUALCOMM is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Valuation & Earnings
This table compares QUALCOMM 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|
|QUALCOMM||$22.29 billion||3.72||$2.47 billion||($2.84)||-19.74|
|Telefonaktiebolaget LM Ericsson||$23.60 billion||0.91||-$4.13 billion||($1.24)||-5.22|
QUALCOMM has higher earnings, but lower revenue than Telefonaktiebolaget LM Ericsson. QUALCOMM is trading at a lower price-to-earnings ratio than Telefonaktiebolaget LM Ericsson, indicating that it is currently the more affordable of the two stocks.
This is a summary of recent ratings for QUALCOMM and Telefonaktiebolaget LM Ericsson, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Telefonaktiebolaget LM Ericsson||3||6||2||0||1.91|
QUALCOMM currently has a consensus target price of $68.74, indicating a potential upside of 22.62%. Telefonaktiebolaget LM Ericsson has a consensus target price of $4.91, indicating a potential downside of 24.07%. Given QUALCOMM’s stronger consensus rating and higher probable upside, analysts clearly believe QUALCOMM is more favorable than Telefonaktiebolaget LM Ericsson.
QUALCOMM beats Telefonaktiebolaget LM Ericsson on 13 of the 16 factors compared between the two stocks.
QUALCOMM Company Profile
QUALCOMM Incorporated is engaged in the development and commercialization of a digital communication technology called code division multiple access (CDMA). The Company is engaged in the development and commercialization of the orthogonal frequency division multiple access (OFDMA) family of technologies, including long-term evolution (LTE), which is an Orthogonal Frequency Division Multiplexing (OFDM)-based standard that uses OFDMA and single-carrier Frequency Division Multiple Access (FDMA), for cellular wireless communication applications. The Company’s segments include QCT (Qualcomm CDMA Technologies), QTL (Qualcomm Technology Licensing) and QSI (Qualcomm Strategic Initiatives). The Company also develops and commercializes a range of other technologies used in handsets and tablets that contribute to end user demand. The Company’s products principally consist of integrated circuits (chips or chipsets) and system software used in mobile devices and in wireless networks.
Telefonaktiebolaget LM Ericsson Company Profile
Telefonaktiebolaget LM Ericsson (Ericsson) provides infrastructure, services and software to the telecommunication industry and other sectors. The Company’s segments include Networks, IT & Cloud and Media. The Networks segment consists of two business units: Network Products and Network Services. The overall focus is on evolving and managing access networks, including the development of hardware and software for radio access and transport networks. The IT & Cloud business includes two business units: IT & Cloud Products and IT & Cloud Services. The focus in IT & Cloud is to help telecom operators and selected enterprises through the digital transformations ahead. It develops and delivers software-based solutions for television and media and combines a product portfolio that spans the television value chain, with systems integration and managed services. The portfolio includes compression, content publishing through set-top box or pure over-the-top, content delivery and analytics.
Receive News & Ratings for QUALCOMM Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for QUALCOMM and related companies with MarketBeat.com's FREE daily email newsletter.