ERICSSON LM-A SHS (ERCG.DE) Stock Fundamental Analysis
Europe - Frankfurt Stock Exchange - FRA:ERCG - SE0000108649 - Common Stock
8.29 EUR
-0.1 (-1.19%)
ERCG gets a fundamental rating of 6 out of 10. The analysis compared the fundamentals against 29 industry peers in the Communications Equipment industry. While ERCG belongs to the best of the industry regarding profitability, there are some minor concerns on its financial health. A decent growth rate in combination with a cheap valuation! Better keep an eye on ERCG. ERCG also has an excellent dividend rating.
1. Profitability
1.1 Basic Checks
In the past year ERCG was profitable.
In the past year ERCG had a positive cash flow from operations.
ERCG had positive earnings in 4 of the past 5 years.
ERCG had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
The Return On Assets of ERCG (8.72%) is better than 82.76% of its industry peers.
The Return On Equity of ERCG (24.01%) is better than 86.21% of its industry peers.
ERCG has a Return On Invested Capital of 13.55%. This is amongst the best in the industry. ERCG outperforms 82.76% of its industry peers.
ERCG had an Average Return On Invested Capital over the past 3 years of 9.43%. This is below the industry average of 11.51%.
The last Return On Invested Capital (13.55%) for ERCG is above the 3 year average (9.43%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 8.72% | ||
| ROE | 24.01% | ||
| ROIC | 13.55% |
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
ERCG's Profit Margin of 10.26% is fine compared to the rest of the industry. ERCG outperforms 79.31% of its industry peers.
ERCG's Profit Margin has declined in the last couple of years.
The Operating Margin of ERCG (12.97%) is better than 75.86% of its industry peers.
ERCG's Operating Margin has improved in the last couple of years.
Looking at the Gross Margin, with a value of 47.62%, ERCG is in line with its industry, outperforming 51.72% of the companies in the same industry.
In the last couple of years the Gross Margin of ERCG has grown nicely.
| 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), ERCG is creating value.
ERCG has about the same amout of shares outstanding than it did 1 year ago.
Compared to 5 years ago, ERCG has more shares outstanding
Compared to 1 year ago, ERCG has an improved debt to assets ratio.
2.2 Solvency
ERCG 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.
ERCG's Debt to FCF ratio of 1.45 is fine compared to the rest of the industry. ERCG outperforms 79.31% of its industry peers.
ERCG has a Debt/Equity ratio of 0.35. This is a healthy value indicating a solid balance between debt and equity.
ERCG has a Debt to Equity ratio (0.35) which is comparable to the rest of the industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.35 | ||
| Debt/FCF | 1.45 | ||
| Altman-Z | N/A |
ROIC/WACC2.19
WACC6.19%
2.3 Liquidity
ERCG has a Current Ratio of 1.17. This is a normal value and indicates that ERCG is financially healthy and should not expect problems in meeting its short term obligations.
With a Current ratio value of 1.17, ERCG is not doing good in the industry: 75.86% of the companies in the same industry are doing better.
ERCG has a Quick Ratio of 1.17. This is a bad value and indicates that ERCG is not financially healthy enough and could expect problems in meeting its short term obligations.
ERCG has a worse Quick ratio (0.94) than 68.97% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.17 | ||
| Quick Ratio | 0.94 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an impressive 541.12% over the past year.
The earnings per share for ERCG have been decreasing by -17.01% on average. This is quite bad
ERCG shows a decrease in Revenue. In the last year, the revenue decreased by -2.65%.
Measured over the past years, ERCG shows a small growth in Revenue. The Revenue has been growing by 1.76% on average per year.
EPS 1Y (TTM)541.12%
EPS 3Y-38.27%
EPS 5Y-17.01%
EPS Q2Q%113.66%
Revenue 1Y (TTM)-2.65%
Revenue growth 3Y2.19%
Revenue growth 5Y1.76%
Sales Q2Q%-8.99%
3.2 Future
The Earnings Per Share is expected to grow by 30.26% on average over the next years. This is a very strong growth
The Revenue is expected to decrease by -0.91% on average over the next years.
EPS Next Y348.24%
EPS Next 2Y96.63%
EPS Next 3Y59.26%
EPS Next 5Y30.26%
Revenue Next Year-4.89%
Revenue Next 2Y-2.58%
Revenue Next 3Y-1.15%
Revenue Next 5Y-0.91%
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 10.77, the valuation of ERCG can be described as very reasonable.
Based on the Price/Earnings ratio, ERCG is valued cheaply inside the industry as 93.10% of the companies are valued more expensively.
ERCG is valuated cheaply when we compare the Price/Earnings ratio to 25.45, which is the current average of the S&P500 Index.
With a Price/Forward Earnings ratio of 13.81, ERCG is valued correctly.
82.76% of the companies in the same industry are more expensive than ERCG, based on the Price/Forward Earnings ratio.
ERCG is valuated cheaply when we compare the Price/Forward Earnings ratio to 34.46, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 10.77 | ||
| Fwd PE | 13.81 |
4.2 Price Multiples
ERCG's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. ERCG is cheaper than 86.21% of the companies in the same industry.
72.41% of the companies in the same industry are more expensive than ERCG, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 10 | ||
| EV/EBITDA | 7.16 |
4.3 Compensation for Growth
ERCG's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
The decent profitability rating of ERCG may justify a higher PE ratio.
ERCG's earnings are expected to grow with 59.26% in the coming years. This may justify a more expensive valuation.
PEG (NY)0.03
PEG (5Y)N/A
EPS Next 2Y96.63%
EPS Next 3Y59.26%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 3.15%, ERCG has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 5.25, ERCG pays a better dividend. On top of this ERCG pays more dividend than 89.66% of the companies listed in the same industry.
ERCG's Dividend Yield is a higher than the S&P500 average which is at 2.45.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.15% |
5.2 History
The dividend of ERCG is nicely growing with an annual growth rate of 22.02%!
Dividend Growth(5Y)22.02%
Div Incr Years1
Div Non Decr Years6
5.3 Sustainability
37.84% of the earnings are spent on dividend by ERCG. This is a low number and sustainable payout ratio.
The dividend of ERCG is growing, but earnings are growing more, so the dividend growth is sustainable.
DP37.84%
EPS Next 2Y96.63%
EPS Next 3Y59.26%
FRA:ERCG (11/21/2025, 7:00:00 PM)
8.29
-0.1 (-1.19%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupTechnology Hardware & Equipment
GICS IndustryCommunications Equipment
Earnings (Last)
Earnings (Next)
Inst Owners54.97%
Inst Owner ChangeN/A
Ins Owners0.07%
Ins Owner ChangeN/A
Market Cap27.63B
Revenue(TTM)240.31B
Net Income(TTM)24.64B
Analysts56.55
Price Target7.96 (-3.98%)
Short Float %N/A
Short RatioN/A
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.15% |
Yearly Dividend0.24
Dividend Growth(5Y)22.02%
DP37.84%
Div Incr Years1
Div Non Decr Years6
Ex-DateN/A
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)49.11%
Min EPS beat(2)20.62%
Max EPS beat(2)77.6%
EPS beat(4)3
Avg EPS beat(4)34.33%
Min EPS beat(4)-10.72%
Max EPS beat(4)77.6%
EPS beat(8)6
Avg EPS beat(8)-29.88%
EPS beat(12)9
Avg EPS beat(12)-11.71%
EPS beat(16)10
Avg EPS beat(16)-8.77%
Revenue beat(2)0
Avg Revenue beat(2)-3.63%
Min Revenue beat(2)-6.39%
Max Revenue beat(2)-0.88%
Revenue beat(4)0
Avg Revenue beat(4)-2.46%
Min Revenue beat(4)-6.39%
Max Revenue beat(4)-0.45%
Revenue beat(8)1
Avg Revenue beat(8)-2.31%
Revenue beat(12)3
Avg Revenue beat(12)-1.5%
Revenue beat(16)7
Avg Revenue beat(16)-0.68%
PT rev (1m)7.96%
PT rev (3m)13.02%
EPS NQ rev (1m)21.99%
EPS NQ rev (3m)14.08%
EPS NY rev (1m)20.53%
EPS NY rev (3m)21.96%
Revenue NQ rev (1m)0.72%
Revenue NQ rev (3m)-0.27%
Revenue NY rev (1m)-1.38%
Revenue NY rev (3m)-1.69%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 10.77 | ||
| Fwd PE | 13.81 | ||
| P/S | 1.26 | ||
| P/FCF | 10 | ||
| P/OCF | 8.95 | ||
| P/B | 2.96 | ||
| P/tB | 6.78 | ||
| EV/EBITDA | 7.16 |
EPS(TTM)0.77
EY9.29%
EPS(NY)0.6
Fwd EY7.24%
FCF(TTM)0.83
FCFY10%
OCF(TTM)0.93
OCFY11.17%
SpS6.55
BVpS2.8
TBVpS1.22
PEG (NY)0.03
PEG (5Y)N/A
Graham Number6.96
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 8.72% | ||
| ROE | 24.01% | ||
| ROCE | 19.24% | ||
| ROIC | 13.55% | ||
| ROICexc | 19.78% | ||
| ROICexgc | 41.31% | ||
| OM | 12.97% | ||
| PM (TTM) | 10.26% | ||
| GM | 47.62% | ||
| FCFM | 12.65% |
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%
ROICexgc growth 3Y9.12%
ROICexgc 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-Score6
Asset Turnover0.85
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.35 | ||
| Debt/FCF | 1.45 | ||
| Debt/EBITDA | 0.87 | ||
| Cap/Depr | 36.83% | ||
| Cap/Sales | 1.48% | ||
| Interest Coverage | 13.31 | ||
| Cash Conversion | 83.18% | ||
| Profit Quality | 123.37% | ||
| Current Ratio | 1.17 | ||
| Quick Ratio | 0.94 | ||
| Altman-Z | N/A |
F-Score6
WACC6.19%
ROIC/WACC2.19
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)541.12%
EPS 3Y-38.27%
EPS 5Y-17.01%
EPS Q2Q%113.66%
EPS Next Y348.24%
EPS Next 2Y96.63%
EPS Next 3Y59.26%
EPS Next 5Y30.26%
Revenue 1Y (TTM)-2.65%
Revenue growth 3Y2.19%
Revenue growth 5Y1.76%
Sales Q2Q%-8.99%
Revenue Next Year-4.89%
Revenue Next 2Y-2.58%
Revenue Next 3Y-1.15%
Revenue Next 5Y-0.91%
EBIT growth 1Y54.66%
EBIT growth 3Y-10.75%
EBIT growth 5Y16.26%
EBIT Next Year81.48%
EBIT Next 3Y20.93%
EBIT Next 5Y15.06%
FCF growth 1Y392.6%
FCF growth 3Y7.36%
FCF growth 5Y33.08%
OCF growth 1Y169.74%
OCF growth 3Y5.8%
OCF growth 5Y22.35%
ERICSSON LM-A SHS / ERCG.DE FAQ
What is the fundamental rating for ERCG stock?
ChartMill assigns a fundamental rating of 6 / 10 to ERCG.DE.
Can you provide the valuation status for ERICSSON LM-A SHS?
ChartMill assigns a valuation rating of 8 / 10 to ERICSSON LM-A SHS (ERCG.DE). This can be considered as Undervalued.
What is the profitability of ERCG stock?
ERICSSON LM-A SHS (ERCG.DE) has a profitability rating of 7 / 10.
What is the expected EPS growth for ERICSSON LM-A SHS (ERCG.DE) stock?
The Earnings per Share (EPS) of ERICSSON LM-A SHS (ERCG.DE) is expected to grow by 348.24% in the next year.
Is the dividend of ERICSSON LM-A SHS sustainable?
The dividend rating of ERICSSON LM-A SHS (ERCG.DE) is 7 / 10 and the dividend payout ratio is 37.84%.