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Why Ericsson Stock Has Surged 34.3% in 2018

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Dec. 13 2018, Published 8:04 a.m. ET

Ericsson has easily outperformed major indexes

Shares of telecommunications equipment company Ericsson (ERIC) have risen 34.3% in 2018. The stock is currently trading at $8.79, 46.5% above its 52-week low of $6.00. Ericsson has outperformed its peers and the indexes in 2018.

While the SPDR S&P 500 ETF (SPY) and the Power Shares QQQ Trust, Series 1 ETF (QQQ) have risen 0.3% and 5.6%, respectively, ERIC’s peers Cisco (CSCO) and Juniper (JNPR) have generated returns of 27% and 0.23%, respectively, this year.

Ericsson has also managed to hold its own amid the tech sell-off that’s been happening since the start of October. Ericsson has lost just 0.11% in market value since October. Comparatively, Cisco and Juniper have lost 2.6% and 6.6%, respectively, since the start of the fourth quarter.

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Ericsson has beaten earnings in three of the last four quarters

Ericsson shares have gained significant value this year driven by the company’s earnings beat. In the third quarter of 2018, Ericsson reported EPS of $0.12, 200% higher than the estimate of $0.04.

The company reported EPS of $0.01 in the first quarter, higher than the estimate of -$0.03. Its EPS in the fourth quarter of 2017 were $0.05, 67% higher than the estimate of $0.03. Ericsson’s reported EPS of -$0.01 in the second quarter were below the estimate of $0.02.

In the fourth quarter, analysts expect Ericsson to post EPS of $0.12, 140% higher than its EPS of $0.05 in the same period last year.

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