Critical Contrast: Ericsson (NASDAQ:ERIC) versus Clearfield (NASDAQ:CLFD)

Ericsson (NASDAQ:ERIC) and Clearfield (NASDAQ:CLFD) are both computer and technology companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, valuation, risk, institutional ownership, profitability, analyst recommendations and dividends.

Valuation & Earnings

This table compares Ericsson and Clearfield”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ericsson	$23.45 billion	1.12	$1.89 million	$0.50	15.74
Clearfield	$166.71 million	2.70	-$12.45 million	$0.01	3,262.00

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

Institutional and Insider Ownership

8.0% of Ericsson shares are held by institutional investors. Comparatively, 88.7% of Clearfield shares are held by institutional investors. 17.8% of Clearfield shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Ericsson	7.06%	21.17%	6.64%
Clearfield	0.11%	0.07%	0.06%

Analyst Ratings

This is a summary of current ratings for Ericsson and Clearfield, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ericsson	0	2	0	0	2.00
Clearfield	0	2	2	0	2.50

Ericsson presently has a consensus target price of $9.80, indicating a potential upside of 24.52%. Clearfield has a consensus target price of $47.50, indicating a potential upside of 45.62%. Given Clearfield’s stronger consensus rating and higher possible upside, analysts clearly believe Clearfield is more favorable than Ericsson.

Risk & Volatility

Ericsson has a beta of 0.87, suggesting that its stock price is 13% less volatile than the S&P 500. Comparatively, Clearfield has a beta of 1.7, suggesting that its stock price is 70% more volatile than the S&P 500.

Summary

Clearfield beats Ericsson on 8 of the 14 factors compared between the two stocks.

About Ericsson

Telefonaktiebolaget LM Ericsson (publ), together with its subsidiaries, provides mobile connectivity solutions for telcom operators and enterprise customers in various sectors in North America, Europe, Latin America, the Middle East, Africa, North East Asia, South East Asia, Oceania, and India. It operates in four segments: Networks; Cloud Software and Services; Enterprise; and Other. The Networks segment offers radio access network (RAN) solutions for various network spectrum bands, including purpose-built and open RAN-prepared hardware and software. This segment also provides cloud RAN; transport solutions; passive and active antennas; and a range of service portfolios covering network deployment and support. The Cloud Software and Services segment offers core networks, business and operational support systems, network design and optimization, and managed network services. The Enterprise segment offers a global communications platform, including cloud-based unified communications as a service, contact center as a service, and communications platform as a service; enterprise wireless solutions comprising private wireless networks and wireless wan pre-packaged solutions; and technologies and new business solutions, such as mobile financial services, security solutions, and advertising services. The Other segment includes Redbee media that prepares and distributes live and video services for broadcasters, sports leagues, and communications service providers. It offers its services through wholesalers and distributors. The company was formerly known as Allmanna Telefon AB LM Ericsson and changed its name to Telefonaktiebolaget LM Ericsson (publ) in January 1926. Telefonaktiebolaget LM Ericsson (publ) was founded in 1876 and is headquartered in Stockholm, Sweden.

About Clearfield

Clearfield, Inc. manufactures and sells various fiber connectivity products in the United States and internationally. The company offers FieldSmart, a series of panels, cabinets, wall boxes, and other enclosures; WaveSmart, an optical components integrated for signal coupling, splitting, termination, multiplexing, demultiplexing, and attenuation for integration within its fiber management platform; and active cabinet products. It also provides CraftSmart FiberFirst pedestals, an access terminal that offers a cable management and mounting bracket kit to support the deployment of access terminals; YOURx, an access terminal that provides flexibility with cable mid-span and internal splicing options; and FieldShield, a fiber pathway and protection method for reducing the cost of broadband deployment. In addition, the company offers fiber assemblies; fiber optic and copper cables, microducts, microduct accessories, and tools; and installation and connection accessories for fiber optic networks. It serves community broadband customers, multiple system operators, large regional service providers, and wireline/wireless national telco carriers. The company was formerly known as APA Enterprises, Inc. and changed its name to Clearfield, Inc. in January 2008. Clearfield, Inc. was incorpoarted in 1979 and is headquartered in Minneapolis, Minnesota.