ERICSSON LM-A SHS (ERCG.DE) Stock Fundamental Analysis
FRA:ERCG - Deutsche Boerse Ag - SE0000108649 - Common Stock - Currency: EUR
We assign a fundamental rating of 6 out of 10 to ERCG. ERCG was compared to 26 industry peers in the Communications Equipment industry. ERCG has an excellent profitability rating, but there are some minor concerns on its financial health. ERCG is valued quite cheap, while showing a decent growth score. This is a good combination! Finally 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
Looking at the Return On Assets, with a value of 6.40%, ERCG belongs to the top of the industry, outperforming 80.77% of the companies in the same industry.
ERCG has a better Return On Equity (19.95%) than 80.77% of its industry peers.
The Return On Invested Capital of ERCG (14.40%) is better than 92.31% of its industry peers.
ERCG had an Average Return On Invested Capital over the past 3 years of 9.43%. This is in line with the industry average of 10.22%.
The last Return On Invested Capital (14.40%) for ERCG is above the 3 year average (9.43%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 6.4% | ||
| ROE | 19.95% | ||
| ROIC | 14.4% |
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 has a better Profit Margin (7.04%) than 76.92% of its industry peers.
In the last couple of years the Profit Margin of ERCG has declined.
Looking at the Operating Margin, with a value of 12.47%, ERCG belongs to the top of the industry, outperforming 84.62% of the companies in the same industry.
In the last couple of years the Operating Margin of ERCG has grown nicely.
ERCG has a Gross Margin (47.18%) which is comparable to the rest of the industry.
ERCG's Gross Margin has improved in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 12.47% | ||
| PM (TTM) | 7.04% | ||
| GM | 47.18% |
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
ERCG has a Return on Invested Capital (ROIC), which is well above the Cost of Capital (WACC), which means it is creating value.
ERCG has about the same amout of shares outstanding than it did 1 year ago.
The number of shares outstanding for ERCG has been increased compared to 5 years ago.
ERCG has a better debt/assets ratio than last year.
2.2 Solvency
The Debt to FCF ratio of ERCG is 1.13, which is an excellent value as it means it would take ERCG, only 1.13 years of fcf income to pay off all of its debts.
Looking at the Debt to FCF ratio, with a value of 1.13, ERCG belongs to the top of the industry, outperforming 88.46% of the companies in the same industry.
A Debt/Equity ratio of 0.40 indicates that ERCG is not too dependend on debt financing.
ERCG has a Debt to Equity ratio (0.40) which is comparable to the rest of the industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.4 | ||
| Debt/FCF | 1.13 | ||
| Altman-Z | N/A |
ROIC/WACC2.38
WACC6.04%
2.3 Liquidity
ERCG has a Current Ratio of 1.09. This is a normal value and indicates that ERCG is financially healthy and should not expect problems in meeting its short term obligations.
The Current ratio of ERCG (1.09) is worse than 76.92% of its industry peers.
A Quick Ratio of 0.86 indicates that ERCG may have some problems paying its short term obligations.
ERCG has a worse Quick ratio (0.86) than 76.92% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.09 | ||
| Quick Ratio | 0.86 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an impressive 1007.02% over the past year.
Measured over the past years, ERCG 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 -1.47% in the past year.
ERCG shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 1.76% yearly.
EPS 1Y (TTM)1007.02%
EPS 3Y-38.27%
EPS 5Y-17.01%
EPS Q2Q%154.7%
Revenue 1Y (TTM)-1.47%
Revenue growth 3Y2.19%
Revenue growth 5Y1.76%
Sales Q2Q%-6.21%
3.2 Future
The Earnings Per Share is expected to grow by 29.89% on average over the next years. This is a very strong growth
The Revenue is expected to grow by 0.40% on average over the next years.
EPS Next Y267.53%
EPS Next 2Y93.12%
EPS Next 3Y58.42%
EPS Next 5Y29.89%
Revenue Next Year-3.26%
Revenue Next 2Y-1.2%
Revenue Next 3Y-0.31%
Revenue Next 5Y0.4%
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 11.02, the valuation of ERCG can be described as very reasonable.
Based on the Price/Earnings ratio, ERCG is valued cheaper than 96.15% of the companies in the same industry.
ERCG is valuated cheaply when we compare the Price/Earnings ratio to 27.11, which is the current average of the S&P500 Index.
ERCG is valuated reasonably with a Price/Forward Earnings ratio of 11.42.
Based on the Price/Forward Earnings ratio, ERCG is valued cheaply inside the industry as 84.62% of the companies are valued more expensively.
ERCG is valuated cheaply when we compare the Price/Forward Earnings ratio to 35.78, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 11.02 | ||
| Fwd PE | 11.42 |
4.2 Price Multiples
ERCG's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. ERCG is cheaper than 92.31% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, ERCG is valued cheaply inside the industry as 88.46% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 6.25 | ||
| EV/EBITDA | 6.37 |
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 excellent profitability rating of ERCG may justify a higher PE ratio.
ERCG's earnings are expected to grow with 58.42% in the coming years. This may justify a more expensive valuation.
PEG (NY)0.04
PEG (5Y)N/A
EPS Next 2Y93.12%
EPS Next 3Y58.42%
5. Dividend
5.1 Amount
ERCG has a Yearly Dividend Yield of 3.94%.
Compared to an average industry Dividend Yield of 6.27, ERCG pays a better dividend. On top of this ERCG pays more dividend than 80.77% of the companies listed in the same industry.
ERCG's Dividend Yield is rather good when compared to the S&P500 average which is at 2.39.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.94% |
5.2 History
On average, the dividend of ERCG 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
ERCG pays out 53.91% of its income as dividend. This is a bit on the high side, but may be sustainable.
ERCG's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP53.91%
EPS Next 2Y93.12%
EPS Next 3Y58.42%
FRA:ERCG (8/7/2025, 7:00:00 PM)
6.5
-0.22 (-3.27%)
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 Cap21.67B
Analysts56.55
Price Target6.95 (6.92%)
Short Float %N/A
Short RatioN/A
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.94% |
Yearly Dividend0.24
Dividend Growth(5Y)22.02%
DP53.91%
Div Incr Years1
Div Non Decr Years6
Ex-DateN/A
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)35.22%
Min EPS beat(2)20.62%
Max EPS beat(2)49.81%
EPS beat(4)3
Avg EPS beat(4)19.97%
Min EPS beat(4)-10.72%
Max EPS beat(4)49.81%
EPS beat(8)6
Avg EPS beat(8)-36.77%
EPS beat(12)8
Avg EPS beat(12)-18.24%
EPS beat(16)10
Avg EPS beat(16)-12.96%
Revenue beat(2)0
Avg Revenue beat(2)-4.24%
Min Revenue beat(2)-6.39%
Max Revenue beat(2)-2.1%
Revenue beat(4)0
Avg Revenue beat(4)-2.41%
Min Revenue beat(4)-6.39%
Max Revenue beat(4)-0.45%
Revenue beat(8)1
Avg Revenue beat(8)-2.58%
Revenue beat(12)4
Avg Revenue beat(12)-1.33%
Revenue beat(16)7
Avg Revenue beat(16)-0.89%
PT rev (1m)-15.22%
PT rev (3m)-10.79%
EPS NQ rev (1m)-4.03%
EPS NQ rev (3m)-19.57%
EPS NY rev (1m)0%
EPS NY rev (3m)0%
Revenue NQ rev (1m)-4.16%
Revenue NQ rev (3m)-9.35%
Revenue NY rev (1m)-3.59%
Revenue NY rev (3m)-4%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 11.02 | ||
| Fwd PE | 11.42 | ||
| P/S | 0.99 | ||
| P/FCF | 6.25 | ||
| P/OCF | 5.72 | ||
| P/B | 2.8 | ||
| P/tB | 9.01 | ||
| EV/EBITDA | 6.37 |
EPS(TTM)0.59
EY9.08%
EPS(NY)0.57
Fwd EY8.76%
FCF(TTM)1.04
FCFY16.01%
OCF(TTM)1.14
OCFY17.49%
SpS6.59
BVpS2.33
TBVpS0.72
PEG (NY)0.04
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 6.4% | ||
| ROE | 19.95% | ||
| ROCE | 20.46% | ||
| ROIC | 14.4% | ||
| ROICexc | 19.72% | ||
| ROICexgc | 43.53% | ||
| OM | 12.47% | ||
| PM (TTM) | 7.04% | ||
| GM | 47.18% | ||
| FCFM | 15.79% |
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 Turnover0.91
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.4 | ||
| Debt/FCF | 1.13 | ||
| Debt/EBITDA | 0.92 | ||
| Cap/Depr | 52.07% | ||
| Cap/Sales | 1.46% | ||
| Interest Coverage | 12.07 | ||
| Cash Conversion | 112.98% | ||
| Profit Quality | 224.29% | ||
| Current Ratio | 1.09 | ||
| Quick Ratio | 0.86 | ||
| Altman-Z | N/A |
F-Score7
WACC6.04%
ROIC/WACC2.38
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)1007.02%
EPS 3Y-38.27%
EPS 5Y-17.01%
EPS Q2Q%154.7%
EPS Next Y267.53%
EPS Next 2Y93.12%
EPS Next 3Y58.42%
EPS Next 5Y29.89%
Revenue 1Y (TTM)-1.47%
Revenue growth 3Y2.19%
Revenue growth 5Y1.76%
Sales Q2Q%-6.21%
Revenue Next Year-3.26%
Revenue Next 2Y-1.2%
Revenue Next 3Y-0.31%
Revenue Next 5Y0.4%
EBIT growth 1Y72.11%
EBIT growth 3Y-10.75%
EBIT growth 5Y16.26%
EBIT Next Year84.47%
EBIT Next 3Y23.21%
EBIT Next 5Y11.76%
FCF growth 1Y321.76%
FCF growth 3Y7.36%
FCF growth 5Y33.08%
OCF growth 1Y167.74%
OCF growth 3Y5.8%
OCF growth 5Y22.35%