Daily Stock Analysis: Telefonaktiebolaget LM Ericsson

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Telefonaktiebolaget L M Ericsson has the ticker symbol ERIC and is a large-cap member of the technology sector as a communication equipment firm. This is my first report on Telefonaktiebolaget L M Ericsson for this Vista folio. ERIC was reviewed for a previous DOTW portfolio.

Ericsson is a leading supplier within the telecommunications equipment sector. 

The company's three major operating segments are networks, digital services, and managed services. Ericsson sells hardware, software, and services primarily to communication service providers while licensing patents to handset manufacturers. 

The Stockholm, Sweden-based company derives sales worldwide and had 95,000 employees as of June 2020.

Telefonaktiebolaget LM Ericsson (publ) was founded in 1876

Three key data points gauge dividend equities or funds like Telefonaktiebolaget L M Ericsson:

(1) Price

(2) Dividends

(3) Returns

Those three basic keys best tell whether a company has made, is making, and will make money. 

ERIC Price

Ericsson's price per share closed at $13.38 yesterday. One year ago its price was $8.59. Thus, the price per share has grown nearly 56% as it recovered from last year's Covid market slump. 

Should LM Ericsson stock trade in the range of $9 to $18.00 this next year, its recent $13.38 price might rise by $2.62 to reach $16.00 by May 19, 2022. My estimate is $0.15 lower of the median of nine price estimates from analysts tracking ERIC. 

ERIC Dividends

Ericsson's most recent Semi-annual dividend of $0.12 was paid April 16th. Combined with a previous dividend of $0.08 equates to $0.20 annually with a yield of 1.49% at yesterday's $13.38 closing price. L M Ericsson Ltd paid variable annual dividends (generally increasing annually) from April 2005 to April 2020 when dividends moved to semiannual mode.

ERIC Returns

Adding the $0.20 annual Telefonaktiebolaget L M Ericsson forward-looking dividend to my $2.62 price upside estimate shows a $2.82 potential gross gain, per share, to be reduced by any costs to trade the shares.  

If we put a little over $1,000.00 today in ERIC at $13.38 per share, we'd buy 75 shares.

A $10 broker fee (if charged) would be paid half at purchase and half at a sale and might cost us about $0.13 per share.

Subtract that maybe $0.13 brokerage cost from my estimated $2.82 gross gain per share results in a net gain of $2.69 X 75 shares = $201.75 for a 20.17% net gain on a $1,003.50 investment.

So it is that Telefonaktiebolaget L M Ericsson shows a possible 20.17% net gain including a 1.49% forward-looking dividend yield. 

Over the next year at this time, a $1000 investment in MGIC could generate $14.90 in cash dividends. And a single share bought at yesterday's closing price was $13.38! So, if ERIC is your kind of communication equipment investment, Telefonaktiebolaget L M Ericsson's share price is over $1.00 below the expected annual dividend income from $1,000 invested. This suggests now is a prime time to add L M Ericsson to your holdings. 

All of the estimates above are speculation based on the past history of Telefonaktiebolaget L M Ericsson. Only time and money invested in this stock will determine its worth.

Disclaimer:  This article is for informational and educational purposes only and should not be construed to constitute investment advice. Nothing contained herein shall constitute a ...

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