ERICSSON LM-B SHS (1ERICB.MI) Stock Fundamental Analysis
Europe - Euronext Milan - BIT:1ERICB - SE0000108656 - Common Stock
8.176 EUR
-0.06 (-0.7%)
We assign a fundamental rating of 6 out of 10 to 1ERICB. 1ERICB was compared to 31 industry peers in the Communications Equipment industry. 1ERICB has an excellent profitability rating, but there are some minor concerns on its financial health. 1ERICB is valued quite cheap, while showing a decent growth score. This is a good combination! 1ERICB also has an excellent dividend rating.
1. Profitability
1.1 Basic Checks
- In the past year 1ERICB was profitable.
- In the past year 1ERICB had a positive cash flow from operations.
- 1ERICB had positive earnings in 4 of the past 5 years.
- Each year in the past 5 years 1ERICB had a positive operating cash flow.
1.2 Ratios
- 1ERICB has a Return On Assets of 8.72%. This is in the better half of the industry: 1ERICB outperforms 79.31% of its industry peers.
- The Return On Equity of 1ERICB (24.01%) is better than 82.76% of its industry peers.
- 1ERICB's Return On Invested Capital of 14.43% is amongst the best of the industry. 1ERICB outperforms 86.21% of its industry peers.
- 1ERICB had an Average Return On Invested Capital over the past 3 years of 10.05%. This is in line with the industry average of 11.39%.
- The last Return On Invested Capital (14.43%) for 1ERICB is above the 3 year average (10.05%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 8.72% | ||
| ROE | 24.01% | ||
| ROIC | 14.43% |
ROA(3y)-1.18%
ROA(5y)2.06%
ROE(3y)-4.3%
ROE(5y)5.63%
ROIC(3y)10.05%
ROIC(5y)11.58%
1.3 Margins
- 1ERICB has a Profit Margin of 10.26%. This is in the better half of the industry: 1ERICB outperforms 79.31% of its industry peers.
- In the last couple of years the Profit Margin of 1ERICB has declined.
- Looking at the Operating Margin, with a value of 12.97%, 1ERICB is in the better half of the industry, outperforming 75.86% of the companies in the same industry.
- In the last couple of years the Operating Margin of 1ERICB has grown nicely.
- The Gross Margin of 1ERICB (47.62%) is comparable to the rest of the industry.
- 1ERICB's Gross Margin has improved in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 12.97% | ||
| PM (TTM) | 10.26% | ||
| GM | 47.62% |
OM growth 3Y-12.66%
OM growth 5Y14.26%
PM growth 3Y-90.62%
PM growth 5Y-61.69%
GM growth 3Y1.11%
GM growth 5Y3.7%
2. Health
2.1 Basic Checks
- With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), 1ERICB is creating value.
- The number of shares outstanding for 1ERICB remains at a similar level compared to 1 year ago.
- The number of shares outstanding for 1ERICB has been increased compared to 5 years ago.
- Compared to 1 year ago, 1ERICB has an improved debt to assets ratio.
2.2 Solvency
- 1ERICB has a debt to FCF ratio of 1.45. This is a very positive value and a sign of high solvency as it would only need 1.45 years to pay back of all of its debts.
- Looking at the Debt to FCF ratio, with a value of 1.45, 1ERICB belongs to the top of the industry, outperforming 82.76% of the companies in the same industry.
- 1ERICB has a Debt/Equity ratio of 0.35. This is a healthy value indicating a solid balance between debt and equity.
- Looking at the Debt to Equity ratio, with a value of 0.35, 1ERICB is in line with its industry, outperforming 58.62% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.35 | ||
| Debt/FCF | 1.45 | ||
| Altman-Z | N/A |
ROIC/WACC2.22
WACC6.51%
2.3 Liquidity
- 1ERICB has a Current Ratio of 1.17. This is a normal value and indicates that 1ERICB is financially healthy and should not expect problems in meeting its short term obligations.
- The Current ratio of 1ERICB (1.17) is worse than 75.86% of its industry peers.
- A Quick Ratio of 0.94 indicates that 1ERICB may have some problems paying its short term obligations.
- The Quick ratio of 1ERICB (0.94) is worse than 65.52% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.17 | ||
| Quick Ratio | 0.94 |
3. Growth
3.1 Past
- 1ERICB shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 395.75%, which is quite impressive.
- 1ERICB shows a very negative growth in Earnings Per Share. Measured over the last years, the EPS has been decreasing by -17.01% yearly.
- The Revenue has decreased by -2.65% in the past year.
- 1ERICB shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 1.76% yearly.
EPS 1Y (TTM)395.75%
EPS 3Y-38.27%
EPS 5Y-17.01%
EPS Q2Q%-5.34%
Revenue 1Y (TTM)-2.65%
Revenue growth 3Y2.19%
Revenue growth 5Y1.76%
Sales Q2Q%-10.28%
3.2 Future
- The Earnings Per Share is expected to grow by 29.10% on average over the next years. This is a very strong growth
- 1ERICB is expected to show a decrease in Revenue. In the coming years, the Revenue will decrease by -0.77% yearly.
EPS Next Y271.88%
EPS Next 2Y89.39%
EPS Next 3Y55.91%
EPS Next 5Y29.1%
Revenue Next Year-3.55%
Revenue Next 2Y-1.45%
Revenue Next 3Y-0.62%
Revenue Next 5Y-0.77%
3.3 Evolution
- The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
- The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
- The Price/Earnings ratio is 13.63, which indicates a correct valuation of 1ERICB.
- 1ERICB's Price/Earnings ratio is rather cheap when compared to the industry. 1ERICB is cheaper than 93.10% of the companies in the same industry.
- 1ERICB is valuated rather cheaply when we compare the Price/Earnings ratio to 27.21, which is the current average of the S&P500 Index.
- A Price/Forward Earnings ratio of 14.55 indicates a correct valuation of 1ERICB.
- 1ERICB's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. 1ERICB is cheaper than 79.31% of the companies in the same industry.
- 1ERICB is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 24.26, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 13.63 | ||
| Fwd PE | 14.55 |
4.2 Price Multiples
- Based on the Enterprise Value to EBITDA ratio, 1ERICB is valued cheaper than 82.76% of the companies in the same industry.
- Based on the Price/Free Cash Flow ratio, 1ERICB is valued a bit cheaper than the industry average as 72.41% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 9.77 | ||
| EV/EBITDA | 6.9 |
4.3 Compensation for Growth
- The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
- 1ERICB has a very decent profitability rating, which may justify a higher PE ratio.
- A more expensive valuation may be justified as 1ERICB's earnings are expected to grow with 55.91% in the coming years.
PEG (NY)0.05
PEG (5Y)N/A
EPS Next 2Y89.39%
EPS Next 3Y55.91%
5. Dividend
5.1 Amount
- 1ERICB has a Yearly Dividend Yield of 3.18%. Purely for dividend investing, there may be better candidates out there.
- Compared to an average industry Dividend Yield of 2.52, 1ERICB pays a better dividend. On top of this 1ERICB pays more dividend than 89.66% of the companies listed in the same industry.
- 1ERICB's Dividend Yield is rather good when compared to the S&P500 average which is at 1.82.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.18% |
5.2 History
- The dividend of 1ERICB is nicely growing with an annual growth rate of 22.02%!
Dividend Growth(5Y)22.02%
Div Incr Years0
Div Non Decr Years0
5.3 Sustainability
- 37.84% of the earnings are spent on dividend by 1ERICB. This is a low number and sustainable payout ratio.
- The dividend of 1ERICB is growing, but earnings are growing more, so the dividend growth is sustainable.
DP37.84%
EPS Next 2Y89.39%
EPS Next 3Y55.91%
ERICSSON LM-B SHS / 1ERICB.MI FAQ
Can you provide the ChartMill fundamental rating for ERICSSON LM-B SHS?
ChartMill assigns a fundamental rating of 5 / 10 to 1ERICB.MI.
Can you provide the valuation status for ERICSSON LM-B SHS?
ChartMill assigns a valuation rating of 7 / 10 to ERICSSON LM-B SHS (1ERICB.MI). This can be considered as Undervalued.
How profitable is ERICSSON LM-B SHS (1ERICB.MI) stock?
ERICSSON LM-B SHS (1ERICB.MI) has a profitability rating of 6 / 10.
What are the PE and PB ratios of ERICSSON LM-B SHS (1ERICB.MI) stock?
The Price/Earnings (PE) ratio for ERICSSON LM-B SHS (1ERICB.MI) is 13.63 and the Price/Book (PB) ratio is 2.89.
Is the dividend of ERICSSON LM-B SHS sustainable?
The dividend rating of ERICSSON LM-B SHS (1ERICB.MI) is 6 / 10 and the dividend payout ratio is 37.84%.