Ericsson (ERIC) Soars 5.5%: Is Further Upside Left in the Stock?
Ericsson (ERIC) shares ended the last trading session 5.5% higher at $6.33. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 8% loss over the past four weeks.
Ericsson announced that it has earmarked a provision of SEK 2.3 billion (approximately $220 million) in fourth-quarter 2022 relating to a potential resolution with the U.S. Department of Justice regarding previously announced, non-criminal, alleged breaches under its 2019 Deferred Prosecution Agreement.
Although the discussions with the judiciary are still ongoing, the company expects that the amount will be sufficient for paying fine for failing to fully disclose results of an internal investigation about potential payments to the Islamic State militant group in Iraq. The smaller-than-expected fine, which will be recorded in the fourth quarter, propelled the share prices.
This telecommunications equipment provider is expected to post quarterly earnings of $0.21 per share in its upcoming report, which represents a year-over-year change of -41.7%. Revenues are expected to be $7.82 billion, down 2.9% from the year-ago quarter.
Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.
For Ericsson, the consensus EPS estimate for the quarter has been revised 8.3% higher over the last 30 days to the current level. And a positive trend in earnings estimate revision usually translates into price appreciation. So, make sure to keep an eye on ERIC going forward to see if this recent jump can turn into more strength down the road.
The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>
Ericsson belongs to the Zacks Wireless Equipment industry. Another stock from the same industry, Motorola (MSI), closed the last trading session 0.1% higher at $264.71. Over the past month, MSI has returned -0.6%.
For Motorola , the consensus EPS estimate for the upcoming report has remained unchanged over the past month at $3.43. This represents a change of +20.4% from what the company reported a year ago. Motorola currently has a Zacks Rank of #3 (Hold).
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