ERICSSON LM-A SHS (ERCG.DE) Stock Fundamental Analysis
FRA:ERCG - SE0000108649 - Common Stock
6.89 EUR
+0.27 (+4.08%)
ERCG gets a fundamental rating of 6 out of 10. The analysis compared the fundamentals against 27 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. ERCG may be a bit undervalued, certainly considering the very reasonable score on growth ERCG also has an excellent dividend rating.
1. Profitability
1.1 Basic Checks
ERCG had positive earnings in the past year.
ERCG had a positive operating cash flow in the past year.
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
ERCG has a better Return On Assets (6.40%) than 74.07% of its industry peers.
Looking at the Return On Equity, with a value of 19.95%, ERCG is in the better half of the industry, outperforming 77.78% of the companies in the same industry.
ERCG has a better Return On Invested Capital (14.40%) than 81.48% of its industry peers.
The Average Return On Invested Capital over the past 3 years for ERCG is below the industry average of 12.67%.
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 Profit Margin of 7.04%. This is in the better half of the industry: ERCG outperforms 74.07% of its industry peers.
ERCG's Profit Margin has declined in the last couple of years.
The Operating Margin of ERCG (12.47%) is better than 81.48% of its industry peers.
In the last couple of years the Operating Margin of ERCG has grown nicely.
ERCG has a Gross Margin of 47.18%. This is comparable to the rest of the industry: ERCG outperforms 51.85% of its industry peers.
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.
ERCG has more shares outstanding than it did 5 years ago.
The debt/assets ratio for ERCG has been reduced compared to a year ago.
2.2 Solvency
ERCG has a debt to FCF ratio of 1.13. This is a very positive value and a sign of high solvency as it would only need 1.13 years to pay back of all of its debts.
ERCG has a better Debt to FCF ratio (1.13) than 81.48% of its industry peers.
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/WACC2.49
WACC5.79%
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.
With a Current ratio value of 1.09, ERCG is not doing good in the industry: 85.19% of the companies in the same industry are doing better.
A Quick Ratio of 0.86 indicates that ERCG may have some problems paying its short term obligations.
Looking at the Quick ratio, with a value of 0.86, ERCG is doing worse than 81.48% of the companies in the same industry.
| 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.
The earnings per share for ERCG have been decreasing by -17.01% on average. This is quite bad
The Revenue has decreased by -1.47% in the past year.
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)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
Based on estimates for the next years, ERCG will show a very strong growth in Earnings Per Share. The EPS will grow by 29.77% on average per year.
Based on estimates for the next years, ERCG will show a decrease in Revenue. The Revenue will decrease by -0.43% on average per year.
EPS Next Y275.82%
EPS Next 2Y91.37%
EPS Next 3Y57.57%
EPS Next 5Y29.77%
Revenue Next Year-3.45%
Revenue Next 2Y-1.3%
Revenue Next 3Y-0.4%
Revenue Next 5Y-0.43%
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
The Price/Earnings ratio is 11.48, which indicates a very decent valuation of ERCG.
88.89% of the companies in the same industry are more expensive than ERCG, based on the Price/Earnings ratio.
The average S&P500 Price/Earnings ratio is at 27.07. ERCG is valued rather cheaply when compared to this.
With a Price/Forward Earnings ratio of 12.12, ERCG is valued correctly.
Based on the Price/Forward Earnings ratio, ERCG is valued cheaply inside the industry as 81.48% of the companies are valued more expensively.
ERCG is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 22.59, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 11.48 | ||
| Fwd PE | 12.12 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, ERCG is valued cheaper than 88.89% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, ERCG is valued cheaper than 81.48% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 6.51 | ||
| EV/EBITDA | 6.64 |
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.
ERCG has a very decent profitability rating, which may justify a higher PE ratio.
ERCG's earnings are expected to grow with 57.57% in the coming years. This may justify a more expensive valuation.
PEG (NY)0.04
PEG (5Y)N/A
EPS Next 2Y91.37%
EPS Next 3Y57.57%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 3.78%, ERCG has a reasonable but not impressive dividend return.
ERCG's Dividend Yield is rather good when compared to the industry average which is at 5.85. ERCG pays more dividend than 92.59% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.46, ERCG pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.78% |
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
53.91% of the earnings are spent on dividend by ERCG. 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 2Y91.37%
EPS Next 3Y57.57%
FRA:ERCG (9/5/2025, 7:00:00 PM)
6.89
+0.27 (+4.08%)
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 Cap22.97B
Analysts56.55
Price Target7.3 (5.95%)
Short Float %N/A
Short RatioN/A
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.78% |
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)5.1%
PT rev (3m)-6.25%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-19.57%
EPS NY rev (1m)2.26%
EPS NY rev (3m)2.26%
Revenue NQ rev (1m)-0.95%
Revenue NQ rev (3m)-10.22%
Revenue NY rev (1m)-0.21%
Revenue NY rev (3m)-3.79%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 11.48 | ||
| Fwd PE | 12.12 | ||
| P/S | 1.03 | ||
| P/FCF | 6.51 | ||
| P/OCF | 5.96 | ||
| P/B | 2.91 | ||
| P/tB | 9.39 | ||
| EV/EBITDA | 6.64 |
EPS(TTM)0.6
EY8.71%
EPS(NY)0.57
Fwd EY8.25%
FCF(TTM)1.06
FCFY15.37%
OCF(TTM)1.16
OCFY16.78%
SpS6.7
BVpS2.37
TBVpS0.73
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
WACC5.79%
ROIC/WACC2.49
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 Y275.82%
EPS Next 2Y91.37%
EPS Next 3Y57.57%
EPS Next 5Y29.77%
Revenue 1Y (TTM)-1.47%
Revenue growth 3Y2.19%
Revenue growth 5Y1.76%
Sales Q2Q%-6.21%
Revenue Next Year-3.45%
Revenue Next 2Y-1.3%
Revenue Next 3Y-0.4%
Revenue Next 5Y-0.43%
EBIT growth 1Y72.11%
EBIT growth 3Y-10.75%
EBIT growth 5Y16.26%
EBIT Next Year84.47%
EBIT Next 3Y23.21%
EBIT Next 5Y11.62%
FCF growth 1Y321.76%
FCF growth 3Y7.36%
FCF growth 5Y33.08%
OCF growth 1Y167.74%
OCF growth 3Y5.8%
OCF growth 5Y22.35%