Ericsson (ERIC) versus Belden (BDC) Financial Review
Belden (NYSE: BDC) and Ericsson (NASDAQ:ERIC) are both mid-cap industrial products companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, profitabiliy, earnings, risk, analyst recommendations, institutional ownership and dividends.
Institutional and Insider Ownership
8.1% of Ericsson shares are held by institutional investors. 1.4% of Belden shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.
This is a breakdown of current ratings and price targets for Belden and Ericsson, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Belden currently has a consensus price target of $83.50, indicating a potential upside of 10.79%. Ericsson has a consensus price target of $5.95, indicating a potential downside of 3.09%. Given Belden’s stronger consensus rating and higher possible upside, equities research analysts plainly believe Belden is more favorable than Ericsson.
Valuation and Earnings
This table compares Belden and Ericsson’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Belden||$2.37 billion||1.34||$436.21 million||$2.65||28.44|
Belden has higher revenue and earnings than Ericsson. Ericsson is trading at a lower price-to-earnings ratio than Belden, indicating that it is currently the more affordable of the two stocks.
This table compares Belden and Ericsson’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Volatility and Risk
Belden has a beta of 2.3, meaning that its stock price is 130% more volatile than the S&P 500. Comparatively, Ericsson has a beta of 1.07, meaning that its stock price is 7% more volatile than the S&P 500.
Belden pays an annual dividend of $0.20 per share and has a dividend yield of 0.3%. Ericsson pays an annual dividend of $0.07 per share and has a dividend yield of 1.1%. Belden pays out 7.5% of its earnings in the form of a dividend. Ericsson pays out -15.2% 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. Ericsson is clearly the better dividend stock, given its higher yield and lower payout ratio.
Belden beats Ericsson on 10 of the 13 factors compared between the two stocks.
Belden Company Profile
Belden Inc. is a signal transmission solutions provider company. The Company operates through five segment: Broadcast Solutions (Broadcast), Enterprise Connectivity Solutions (Enterprise), Industrial Connectivity Solutions (Industrial Connectivity), Industrial IT Solutions (Industrial IT), and Network Security Solutions (Network Security). The segments design, manufacture, and market a portfolio of signal transmission solutions for applications used in a variety of end markets, including broadcast, enterprise, and industrial. The Company’s portfolio of signal transmission solutions provides transmission of data, sound, and video for various applications. The Company’s sells its products to distributors, end users, installers, and to original equipment manufacturers (OEMs). The Company has manufacturing facilities in the United States, other manufacturing and operating facilities in Brazil, Canada, China, Japan, Mexico, and St. Kitts, as well as in various countries in Europe.
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.
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