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 $84.7B against $29.4B — 2.9× the size. Lumentum Holdings Inc. has negative trailing earnings, so its P/E is not meaningful; Ericsson trades at 12.2×. Lumentum Holdings Inc. grew revenue faster over the last twelve months: 83.2% against 2.26%. Ericsson has the higher net margin (10.6% vs −230.1%) and the higher return on invested capital (25.1% vs 9.26%). Across the 21 metrics below, Ericsson leads on 16 and Lumentum Holdings Inc. on 5.

Valuation

Metric ERIC LITE Communication Equipment median
P/E 12.22 n/m 33.61
P/S 1.30 23.31 2.16
P/B 2.80 15.13 2.40
Price to free cash flow 10.24 205.10 25.02
EV/EBITDA 6.70 86.91 13.78
EV/Sales 1.20 22.94 2.27
Earnings yield 8.18% (8.66%) (0.65%)
Free cash flow yield 9.77% 0.49% 1.61%

Profitability

Metric ERIC LITE Communication Equipment median
Gross margin 46.99% 41.67% 39.47%
Operating margin 14.52% 17.41% 2.39%
Net margin 10.61% (230.10%) (0.74%)
Free cash flow margin 12.72% 11.36% 1.39%
Return on equity 0.00% (240.03%) (1.91%)
Return on assets 8.76% (120.34%) (0.20%)
Return on invested capital 25.09% 9.26% 0.72%

Growth

Metric ERIC LITE Communication Equipment median
Revenue growth (TTM) 2.26% 83.22% 11.48%
EPS growth (last fiscal year) 0.00% (25,224.32%) —
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 0.30 0.35 0.06
Current ratio 1.12 1.68 2.01
Net debt to EBITDA (0.50) (1.38) 0.67

Dividend

Metric ERIC LITE Communication Equipment median
Dividend yield 4.83% — 2.63%
Payout ratio 0.72 0.00 0.00

Size

Metric ERIC LITE Communication Equipment median
Market cap 29.36b 84.66b 563.45m

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