Acme Packet (NASDAQ: APKT) and Ericsson (NASDAQ:ERIC) are both technology companies, but which is the better business? We will compare the two companies based on the strength of their profitability, analyst recommendations, dividends, earnings, risk, valuation and institutional ownership.

Dividends

Ericsson pays an annual dividend of $0.07 per share and has a dividend yield of 1.1%. Acme Packet does not pay a dividend. Ericsson pays out -11.5% of its earnings in the form of a dividend.

Earnings & Valuation

This table compares Acme Packet and Ericsson’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Acme Packet N/A N/A N/A ($0.08) N/A
Ericsson $26.02 billion 0.84 $200.60 million ($0.61) -10.75

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

Analyst Ratings

This is a summary of current ratings and recommmendations for Acme Packet and Ericsson, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Acme Packet 0 0 0 0 N/A
Ericsson 2 7 4 0 2.15

Ericsson has a consensus target price of $5.34, suggesting a potential downside of 18.60%.

Institutional & Insider Ownership

8.1% of Ericsson shares are owned by institutional investors. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Profitability

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

Net Margins Return on Equity Return on Assets
Acme Packet N/A N/A N/A
Ericsson -8.60% -5.67% -2.57%

Summary

Ericsson beats Acme Packet on 5 of the 9 factors compared between the two stocks.

About Acme Packet

Acme Packet, Inc. provides session delivery network solutions, which enable the delivery of collaboration services, applications, and next-generation voice, video, data and unified communication and collaboration services and applications across Internet Protocol (IP), networks. The Company’s session delivery network solutions are used by over 1,925 Acme Packet customers in 109 countries. The Company’s customers include fixed line, cable, mobile, transit and over-the-top (OTT), communication service providers, as well as enterprises, contacts centers and government organizations. The Company sells its products and support services through over 330 distribution partners and through its direct sales force. In April 2012, the Company acquired IPTEGO GmbH.

About Ericsson

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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