ERICSSON LM-B SHS (ERCB.DE) Stock Fundamental Analysis
FRA:ERCB - Deutsche Boerse Ag - SE0000108656 - Common Stock - Currency: EUR
We assign a fundamental rating of 5 out of 10 to ERCB. ERCB was compared to 23 industry peers in the Communications Equipment industry. While ERCB belongs to the best of the industry regarding profitability, there are some minor concerns on its financial health. ERCB is valued quite cheap, but it does not seem to be growing.
1. Profitability
1.1 Basic Checks
ERCB had positive earnings in the past year.
ERCB had a positive operating cash flow in the past year.
ERCB had positive earnings in 4 of the past 5 years.
ERCB had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
With a decent Return On Assets value of 0.58%, ERCB is doing good in the industry, outperforming 65.22% of the companies in the same industry.
With a decent Return On Equity value of 1.87%, ERCB is doing good in the industry, outperforming 65.22% of the companies in the same industry.
With an excellent Return On Invested Capital value of 12.87%, ERCB belongs to the best of the industry, outperforming 95.65% of the companies in the same industry.
Measured over the past 3 years, the Average Return On Invested Capital for ERCB is in line with the industry average of 8.47%.
The 3 year average ROIC (9.43%) for ERCB is below the current ROIC(12.87%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 0.58% | ||
| ROE | 1.87% | ||
| ROIC | 12.87% |
ROA(3y)-1.18%
ROA(5y)2.06%
ROE(3y)-4.3%
ROE(5y)5.63%
ROIC(3y)9.43%
ROIC(5y)10.87%
1.3 Margins
ERCB has a better Profit Margin (0.65%) than 65.22% of its industry peers.
ERCB's Profit Margin has declined in the last couple of years.
The Operating Margin of ERCB (10.72%) is better than 86.96% of its industry peers.
ERCB's Operating Margin has improved in the last couple of years.
The Gross Margin of ERCB (46.21%) is better than 60.87% of its industry peers.
In the last couple of years the Gross Margin of ERCB has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 10.72% | ||
| PM (TTM) | 0.65% | ||
| GM | 46.21% |
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), ERCB is creating value.
Compared to 1 year ago, ERCB has about the same amount of shares outstanding.
The number of shares outstanding for ERCB has been increased compared to 5 years ago.
Compared to 1 year ago, ERCB has an improved debt to assets ratio.
2.2 Solvency
ERCB has a debt to FCF ratio of 1.02. This is a very positive value and a sign of high solvency as it would only need 1.02 years to pay back of all of its debts.
ERCB has a better Debt to FCF ratio (1.02) than 91.30% of its industry peers.
A Debt/Equity ratio of 0.41 indicates that ERCB is not too dependend on debt financing.
ERCB has a Debt to Equity ratio of 0.41. This is comparable to the rest of the industry: ERCB outperforms 56.52% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.41 | ||
| Debt/FCF | 1.02 | ||
| Altman-Z | N/A |
ROIC/WACC2.16
WACC5.97%
2.3 Liquidity
ERCB has a Current Ratio of 1.09. This is a normal value and indicates that ERCB is financially healthy and should not expect problems in meeting its short term obligations.
With a Current ratio value of 1.09, ERCB is not doing good in the industry: 82.61% of the companies in the same industry are doing better.
A Quick Ratio of 0.88 indicates that ERCB may have some problems paying its short term obligations.
ERCB has a worse Quick ratio (0.88) than 69.57% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.09 | ||
| Quick Ratio | 0.88 |
3. Growth
3.1 Past
The earnings per share for ERCB have decreased strongly by -46.92% in the last year.
Measured over the past years, ERCB shows a very negative growth in Earnings Per Share. The EPS has been decreasing by -17.01% on average per year.
The Revenue has decreased by -1.79% in the past year.
The Revenue has been growing slightly by 1.76% on average over the past years.
EPS 1Y (TTM)-46.92%
EPS 3Y-38.27%
EPS 5Y-17.01%
EPS Q2Q%60.24%
Revenue 1Y (TTM)-1.79%
Revenue growth 3Y2.19%
Revenue growth 5Y1.76%
Sales Q2Q%3.19%
3.2 Future
The Earnings Per Share is expected to grow by 30.04% on average over the next years. This is a very strong growth
Based on estimates for the next years, ERCB will show a small growth in Revenue. The Revenue will grow by 0.52% on average per year.
EPS Next Y267.53%
EPS Next 2Y93.12%
EPS Next 3Y58.42%
EPS Next 5Y30.04%
Revenue Next Year0.35%
Revenue Next 2Y0.68%
Revenue Next 3Y1.13%
Revenue Next 5Y0.52%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
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
With a Price/Earnings ratio of 36.39, ERCB can be considered very expensive at the moment.
Based on the Price/Earnings ratio, ERCB is valued a bit cheaper than the industry average as 65.22% of the companies are valued more expensively.
The average S&P500 Price/Earnings ratio is at 26.34. ERCB is valued slightly more expensive when compared to this.
With a Price/Forward Earnings ratio of 12.64, ERCB is valued correctly.
Based on the Price/Forward Earnings ratio, ERCB is valued a bit cheaper than 78.26% of the companies in the same industry.
When comparing the Price/Forward Earnings ratio of ERCB to the average of the S&P500 Index (22.19), we can say ERCB is valued slightly cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 36.39 | ||
| Fwd PE | 12.64 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, ERCB is valued cheaper than 91.30% of the companies in the same industry.
ERCB's Price/Free Cash Flow ratio is rather cheap when compared to the industry. ERCB is cheaper than 86.96% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 6.44 | ||
| EV/EBITDA | 6.86 |
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.
The decent profitability rating of ERCB may justify a higher PE ratio.
ERCB's earnings are expected to grow with 58.42% in the coming years. This may justify a more expensive valuation.
PEG (NY)0.14
PEG (5Y)N/A
EPS Next 2Y93.12%
EPS Next 3Y58.42%
5. Dividend
5.1 Amount
ERCB has a Yearly Dividend Yield of 3.53%. Purely for dividend investing, there may be better candidates out there.
Compared to an average industry Dividend Yield of 5.07, ERCB pays a better dividend. On top of this ERCB pays more dividend than 91.30% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.40, ERCB pays a bit more dividend than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.53% |
5.2 History
On average, the dividend of ERCB grows each year by 22.02%, which is quite nice.
Dividend Growth(5Y)22.02%
Div Incr Years1
Div Non Decr Years6
5.3 Sustainability
ERCB pays out 573.48% of its income as dividend. This is not a sustainable payout ratio.
ERCB's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP573.48%
EPS Next 2Y93.12%
EPS Next 3Y58.42%
FRA:ERCB (6/19/2025, 7:00:00 PM)
7.278
-0.01 (-0.16%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupTechnology Hardware & Equipment
GICS IndustryCommunications Equipment
Earnings (Last)
Earnings (Next)
Inst Owners46.79%
Inst Owner ChangeN/A
Ins Owners0.07%
Ins Owner ChangeN/A
Market Cap24.26B
Analysts57.24
Price Target7.61 (4.56%)
Short Float %N/A
Short RatioN/A
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.53% |
Yearly Dividend0.25
Dividend Growth(5Y)22.02%
DP573.48%
Div Incr Years1
Div Non Decr Years6
Ex-DateN/A
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)19.55%
Min EPS beat(2)-10.72%
Max EPS beat(2)49.81%
EPS beat(4)2
Avg EPS beat(4)-132.41%
Min EPS beat(4)-588.91%
Max EPS beat(4)49.81%
EPS beat(8)6
Avg EPS beat(8)-35.54%
EPS beat(12)7
Avg EPS beat(12)-21.49%
EPS beat(16)9
Avg EPS beat(16)-14.64%
Revenue beat(2)0
Avg Revenue beat(2)-1.28%
Min Revenue beat(2)-2.1%
Max Revenue beat(2)-0.45%
Revenue beat(4)1
Avg Revenue beat(4)-0.39%
Min Revenue beat(4)-2.1%
Max Revenue beat(4)1.67%
Revenue beat(8)1
Avg Revenue beat(8)-1.78%
Revenue beat(12)5
Avg Revenue beat(12)-0.75%
Revenue beat(16)7
Avg Revenue beat(16)-0.79%
PT rev (1m)0.23%
PT rev (3m)-2.94%
EPS NQ rev (1m)0%
EPS NQ rev (3m)30.38%
EPS NY rev (1m)0%
EPS NY rev (3m)-4.67%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)-2.79%
Revenue NY rev (1m)0%
Revenue NY rev (3m)-3%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 36.39 | ||
| Fwd PE | 12.64 | ||
| P/S | 1.08 | ||
| P/FCF | 6.44 | ||
| P/OCF | 5.89 | ||
| P/B | 3.12 | ||
| P/tB | 11.59 | ||
| EV/EBITDA | 6.86 |
EPS(TTM)0.2
EY2.75%
EPS(NY)0.58
Fwd EY7.91%
FCF(TTM)1.13
FCFY15.53%
OCF(TTM)1.23
OCFY16.96%
SpS6.77
BVpS2.33
TBVpS0.63
PEG (NY)0.14
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 0.58% | ||
| ROE | 1.87% | ||
| ROCE | 18.28% | ||
| ROIC | 12.87% | ||
| ROICexc | 19.49% | ||
| ROICexgc | 55.79% | ||
| OM | 10.72% | ||
| PM (TTM) | 0.65% | ||
| GM | 46.21% | ||
| FCFM | 16.7% |
ROA(3y)-1.18%
ROA(5y)2.06%
ROE(3y)-4.3%
ROE(5y)5.63%
ROIC(3y)9.43%
ROIC(5y)10.87%
ROICexc(3y)13.21%
ROICexc(5y)15.92%
ROICexgc(3y)41.96%
ROICexgc(5y)38.68%
ROCE(3y)13.4%
ROCE(5y)15.43%
ROICexcg growth 3Y9.12%
ROICexcg growth 5Y7.91%
ROICexc growth 3Y-8.84%
ROICexc growth 5Y4.9%
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%
F-Score7
Asset Turnover0.9
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.41 | ||
| Debt/FCF | 1.02 | ||
| Debt/EBITDA | 0.94 | ||
| Cap/Depr | 36.59% | ||
| Cap/Sales | 1.55% | ||
| Interest Coverage | 10.63 | ||
| Cash Conversion | 122.12% | ||
| Profit Quality | 2589.32% | ||
| Current Ratio | 1.09 | ||
| Quick Ratio | 0.88 | ||
| Altman-Z | N/A |
F-Score7
WACC5.97%
ROIC/WACC2.16
Cap/Depr(3y)47.04%
Cap/Depr(5y)51.35%
Cap/Sales(3y)1.94%
Cap/Sales(5y)2.02%
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)-46.92%
EPS 3Y-38.27%
EPS 5Y-17.01%
EPS Q2Q%60.24%
EPS Next Y267.53%
EPS Next 2Y93.12%
EPS Next 3Y58.42%
EPS Next 5Y30.04%
Revenue 1Y (TTM)-1.79%
Revenue growth 3Y2.19%
Revenue growth 5Y1.76%
Sales Q2Q%3.19%
Revenue Next Year0.35%
Revenue Next 2Y0.68%
Revenue Next 3Y1.13%
Revenue Next 5Y0.52%
EBIT growth 1Y48.21%
EBIT growth 3Y-10.75%
EBIT growth 5Y16.26%
EBIT Next Year84.47%
EBIT Next 3Y23.21%
EBIT Next 5Y11.89%
FCF growth 1Y126.71%
FCF growth 3Y7.36%
FCF growth 5Y33.08%
OCF growth 1Y82.12%
OCF growth 3Y5.8%
OCF growth 5Y22.35%