Contrasting Ericsson (NASDAQ:ERIC) & ADTRAN (NASDAQ:ADTN)

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

Risk and Volatility

ADTRAN has a beta of 1.47, meaning that its stock price is 47% more volatile than the S&P 500. Comparatively, Ericsson has a beta of 0.95, meaning that its stock price is 5% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent recommendations and price targets for ADTRAN and Ericsson, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ADTRAN	2	1	4	0	2.29
Ericsson	2	5	2	0	2.00

ADTRAN presently has a consensus target price of $14.67, suggesting a potential upside of 79.74%. Ericsson has a consensus target price of $11.00, suggesting a potential upside of 8.06%. Given ADTRAN’s stronger consensus rating and higher probable upside, equities analysts clearly believe ADTRAN is more favorable than Ericsson.

Earnings and Valuation

This table compares ADTRAN and Ericsson”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ADTRAN	$1.08 billion	0.61	-$45.66 million	($0.28)	-29.14
Ericsson	$24.19 billion	1.42	$2.91 billion	$0.78	13.05

Ericsson has higher revenue and earnings than ADTRAN. ADTRAN is trading at a lower price-to-earnings ratio than Ericsson, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares ADTRAN and Ericsson’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
ADTRAN	-2.29%	14.24%	1.66%
Ericsson	10.72%	20.63%	7.61%

Institutional and Insider Ownership

80.6% of ADTRAN shares are held by institutional investors. Comparatively, 8.0% of Ericsson shares are held by institutional investors. 2.2% of ADTRAN shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Summary

Ericsson beats ADTRAN on 8 of the 14 factors compared between the two stocks.

About ADTRAN

ADTRAN Holdings, Inc., through its subsidiaries, provides networking and communications platforms, software, systems, and services in the United States, Germany, the United Kingdom, and internationally. It operates through two segments, Network Solutions, and Services & Support. It offers residential gateways; ethernet passive optical network ONUs; gigabit passive optical network/XGS-PON ONTs; traditional SSE, routers, and switches; edge cloud; carrier ethernet network interface devices; Optical Line Terminals; Packet Aggregation, Copper Access, and Oscilloquartz; optical transport and engine solutions; infrastructure monitoring solution; and training, professional, software, and managed services. The company also provides various software, such as Mosaic One SaaS, n-Command, Procloud, MCP, AOE and ACI-E, and Ensemble Controller. It serves large, medium, and small service providers; alternative service providers, such as utilities, municipalities and fiber overbuilders; cable/MSOs; and SMBs and distributed enterprises. ADTRAN Holdings, Inc. was incorporated in 1985 and is headquartered in Huntsville, Alabama.

About Ericsson

Telefonaktiebolaget LM Ericsson (publ), together with its subsidiaries, provides mobile connectivity solutions for telcom operators and enterprise customers in various sectors in North America, Europe, Latin America, the Middle East, Africa, North East Asia, South East Asia, Oceania, and India. It operates in four segments: Networks; Cloud Software and Services; Enterprise; and Other. The Networks segment offers radio access network (RAN) solutions for various network spectrum bands, including purpose-built and open RAN-prepared hardware and software. This segment also provides cloud RAN; transport solutions; passive and active antennas; and a range of service portfolios covering network deployment and support. The Cloud Software and Services segment offers core networks, business and operational support systems, network design and optimization, and managed network services. The Enterprise segment offers a global communications platform, including cloud-based unified communications as a service, contact center as a service, and communications platform as a service; enterprise wireless solutions comprising private wireless networks and wireless wan pre-packaged solutions; and technologies and new business solutions, such as mobile financial services, security solutions, and advertising services. The Other segment includes Redbee media that prepares and distributes live and video services for broadcasters, sports leagues, and communications service providers. It offers its services through wholesalers and distributors. The company was formerly known as Allmanna Telefon AB LM Ericsson and changed its name to Telefonaktiebolaget LM Ericsson (publ) in January 1926. Telefonaktiebolaget LM Ericsson (publ) was founded in 1876 and is headquartered in Stockholm, Sweden.