Ericsson (ERIC) vs Viavi Solutions Inc. (VIAV)

Ericsson and Viavi Solutions Inc. are both Communication Equipment companies. Ericsson is the larger, with a market value of $29.4B against $9.3B — 3.2× the size. Viavi Solutions Inc. has negative trailing earnings, so its P/E is not meaningful; Ericsson trades at 12.2×. Viavi Solutions Inc. grew revenue faster over the last twelve months: 40.0% against 2.26%. Ericsson has the higher net margin (10.6% vs −2.00%) and the higher return on invested capital (25.1% vs 4.58%). Across the 21 metrics below, Ericsson leads on 17 and Viavi Solutions Inc. on 4.

Valuation

Metric ERIC VIAV Communication Equipment median
P/E 12.22 n/m 33.61
P/S 1.30 6.15 2.16
P/B 2.80 6.45 2.40
Price to free cash flow 10.24 56.11 25.02
EV/EBITDA 6.70 57.93 13.78
EV/Sales 1.20 6.14 2.27
Earnings yield 8.18% (0.34%) (0.65%)
Free cash flow yield 9.77% 1.78% 1.61%

Profitability

Metric ERIC VIAV Communication Equipment median
Gross margin 46.99% 57.66% 39.47%
Operating margin 14.52% 6.92% 2.39%
Net margin 10.61% (2.00%) (0.74%)
Free cash flow margin 12.72% 10.96% 1.39%
Return on equity 0.00% (2.73%) (1.91%)
Return on assets 8.76% (1.29%) (0.20%)
Return on invested capital 25.09% 4.58% 0.72%

Growth

Metric ERIC VIAV Communication Equipment median
Revenue growth (TTM) 2.26% 40.03% 11.48%
EPS growth (last fiscal year) 0.00% (186.67%) —
Revenue growth, 5-year CAGR (0.92%) 4.84% 4.92%
Net income growth, 5-year CAGR 8.80% 0.00% 0.00%

Health

Metric ERIC VIAV Communication Equipment median
Debt to equity 0.30 0.44 0.06
Current ratio 1.12 1.85 2.01
Net debt to EBITDA (0.50) (0.07) 0.67

Dividend

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

Size

Metric ERIC VIAV Communication Equipment median
Market cap 29.36b 9.30b 563.45m

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