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Ericsson (ERIC) vs Lumentum Holdings Inc. (LITE)

Ericsson and Lumentum Holdings Inc. are both Communication Equipment companies. Lumentum Holdings Inc. is the larger, with a market value of $46.2B against $31.3B — 1.5× the size. Lumentum Holdings Inc. has negative trailing earnings, so its P/E is not meaningful; Ericsson trades at 17.2×. Lumentum Holdings Inc. grew revenue faster over the last twelve months: 103.2% against 3.44%. Ericsson has the higher net margin (8.18% vs −175.8%) and the higher return on invested capital (19.1% vs 13.7%). Across the 21 metrics below, Ericsson leads on 15 and Lumentum Holdings Inc. on 6.

Valuation

Metric ERIC LITE Communication Equipment median
P/E 17.20 n/m 29.86
P/S 1.40 12.80 1.68
P/B 2.97 10.47 1.72
Price to free cash flow 12.02 118.47 21.71
EV/EBITDA 8.76 40.70 14.04
EV/Sales 1.31 12.64 1.76
Earnings yield 5.82% (15.00%) (0.87%)
Free cash flow yield 8.32% 0.84% 0.68%

Profitability

Metric ERIC LITE Communication Equipment median
Gross margin 46.86% 45.91% 39.34%
Operating margin 11.62% 23.46% 2.43%
Net margin 8.18% (175.78%) (0.64%)
Free cash flow margin 11.65% 10.80% 0.27%
Return on equity 20.55% (245.79%) 0.00%
Return on assets 6.57% (110.69%) (0.10%)
Return on invested capital 19.12% 13.74% 1.29%

Growth

Metric ERIC LITE Communication Equipment median
Revenue growth (TTM) 3.44% 103.20% 9.66%
EPS growth (last fiscal year) 0.00% (25,224.32%) 31.29%
Revenue growth, 5-year CAGR (0.92%) 11.58% 4.92%
Net income growth, 5-year CAGR 8.80% 0.00% 0.00%

Health

Metric ERIC LITE Communication Equipment median
Debt to equity 0.34 0.31 0.05
Current ratio 1.16 1.61 1.99
Net debt to EBITDA (0.50) (1.38) 0.93

Dividend

Metric ERIC LITE Communication Equipment median
Dividend yield 3.04% — 1.10%
Payout ratio 0.52 — 0.44

Size

Metric ERIC LITE Communication Equipment median
Market cap 31.27b 46.23b 495.24m

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