ERICSSON LM-A SHS (ERCG.DE) Stock Fundamental Analysis
FRA:ERCG - Deutsche Boerse Ag - SE0000108649 - Common Stock - Currency: EUR
Taking everything into account, ERCG scores 5 out of 10 in our fundamental rating. ERCG was compared to 25 industry peers in the Communications Equipment industry. ERCG has an excellent profitability rating, but there are some minor concerns on its financial health. ERCG has a valuation in line with the averages, but on the other hand it scores bad on growth.
1. Profitability
1.1 Basic Checks
ERCG had positive earnings in the past year.
In the past year ERCG had a positive cash flow from operations.
ERCG had positive earnings in 4 of the past 5 years.
In the past 5 years ERCG always reported a positive cash flow from operatings.
1.2 Ratios
ERCG has a better Return On Assets (0.58%) than 64.00% of its industry peers.
ERCG has a Return On Equity of 1.87%. This is in the better half of the industry: ERCG outperforms 64.00% of its industry peers.
ERCG's Return On Invested Capital of 12.87% is amongst the best of the industry. ERCG outperforms 88.00% of its industry peers.
The Average Return On Invested Capital over the past 3 years for ERCG is in line with the industry average of 9.33%.
The last Return On Invested Capital (12.87%) for ERCG is above the 3 year average (9.43%), which is a sign of increasing profitability.
| 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
With a decent Profit Margin value of 0.65%, ERCG is doing good in the industry, outperforming 64.00% of the companies in the same industry.
In the last couple of years the Profit Margin of ERCG has declined.
ERCG has a better Operating Margin (10.72%) than 80.00% of its industry peers.
In the last couple of years the Operating Margin of ERCG has grown nicely.
ERCG has a Gross Margin (46.21%) which is in line with its industry peers.
In the last couple of years the Gross Margin of ERCG 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), ERCG is creating value.
Compared to 1 year ago, ERCG has about the same amount of shares outstanding.
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
ERCG 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.
With an excellent Debt to FCF ratio value of 1.02, ERCG belongs to the best of the industry, outperforming 84.00% of the companies in the same industry.
ERCG has a Debt/Equity ratio of 0.41. This is a healthy value indicating a solid balance between debt and equity.
ERCG's Debt to Equity ratio of 0.41 is in line compared to the rest of the industry. ERCG outperforms 56.00% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.41 | ||
| Debt/FCF | 1.02 | ||
| Altman-Z | N/A |
ROIC/WACC1.94
WACC6.65%
2.3 Liquidity
A Current Ratio of 1.09 indicates that ERCG should not have too much problems paying its short term obligations.
With a Current ratio value of 1.09, ERCG is not doing good in the industry: 80.00% of the companies in the same industry are doing better.
A Quick Ratio of 0.88 indicates that ERCG may have some problems paying its short term obligations.
ERCG has a worse Quick ratio (0.88) than 68.00% 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 ERCG have decreased strongly by -46.92% in the last 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 -1.79% 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
ERCG is expected to show a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 45.47% yearly.
ERCG is expected to show a decrease in Revenue. In the coming years, the Revenue will decrease by -0.82% yearly.
EPS Next Y267.53%
EPS Next 2Y93.12%
EPS Next 3Y58.42%
EPS Next 5Y45.47%
Revenue Next Year0.35%
Revenue Next 2Y0.68%
Revenue Next 3Y1.13%
Revenue Next 5Y-0.82%
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 40.20, which means the current valuation is very expensive for ERCG.
ERCG's Price/Earnings ratio is a bit cheaper when compared to the industry. ERCG is cheaper than 68.00% of the companies in the same industry.
When comparing the Price/Earnings ratio of ERCG to the average of the S&P500 Index (26.25), we can say ERCG is valued expensively.
With a Price/Forward Earnings ratio of 13.72, ERCG is valued correctly.
Compared to the rest of the industry, the Price/Forward Earnings ratio of ERCG indicates a somewhat cheap valuation: ERCG is cheaper than 80.00% of the companies listed in the same industry.
ERCG is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 22.15, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 40.2 | ||
| Fwd PE | 13.72 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of ERCG indicates a somewhat cheap valuation: ERCG is cheaper than 80.00% of the companies listed in the same industry.
Based on the Price/Free Cash Flow ratio, ERCG is valued cheaper than 84.00% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 6.99 | ||
| EV/EBITDA | 7.29 |
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 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)0.15
PEG (5Y)N/A
EPS Next 2Y93.12%
EPS Next 3Y58.42%
5. Dividend
5.1 Amount
ERCG has a Yearly Dividend Yield of 3.41%.
ERCG's Dividend Yield is rather good when compared to the industry average which is at 5.11. ERCG pays more dividend than 84.00% of the companies in the same industry.
ERCG's Dividend Yield is a higher than the S&P500 average which is at 2.40.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.41% |
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 Years4
Div Non Decr Years5
5.3 Sustainability
ERCG pays out 573.48% of its income as dividend. This is not a sustainable payout ratio.
ERCG'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:ERCG (5/30/2025, 7:00:00 PM)
8.04
+0.19 (+2.42%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupTechnology Hardware & Equipment
GICS IndustryCommunications Equipment
Earnings (Last)
Earnings (Next)
Inst Owners52.48%
Inst Owner ChangeN/A
Ins Owners0.03%
Ins Owner ChangeN/A
Market Cap26.80B
Analysts57.24
Price Target7.79 (-3.11%)
Short Float %N/A
Short RatioN/A
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.41% |
Yearly Dividend0.25
Dividend Growth(5Y)22.02%
DP573.48%
Div Incr Years4
Div Non Decr Years5
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%
PT rev (3m)8.92%
EPS NQ rev (1m)11.73%
EPS NQ rev (3m)30.94%
EPS NY rev (1m)0%
EPS NY rev (3m)-6.46%
Revenue NQ rev (1m)-0.37%
Revenue NQ rev (3m)-2.95%
Revenue NY rev (1m)-0.43%
Revenue NY rev (3m)-3.12%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 40.2 | ||
| Fwd PE | 13.72 | ||
| P/S | 1.17 | ||
| P/FCF | 6.99 | ||
| P/OCF | 6.4 | ||
| P/B | 3.39 | ||
| P/tB | 12.58 | ||
| EV/EBITDA | 7.29 |
EPS(TTM)0.2
EY2.49%
EPS(NY)0.59
Fwd EY7.29%
FCF(TTM)1.15
FCFY14.31%
OCF(TTM)1.26
OCFY15.64%
SpS6.89
BVpS2.37
TBVpS0.64
PEG (NY)0.15
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
WACC6.65%
ROIC/WACC1.94
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 5Y45.47%
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 5Y-0.82%
EBIT growth 1Y48.21%
EBIT growth 3Y-10.75%
EBIT growth 5Y16.26%
EBIT Next Year84.47%
EBIT Next 3Y23.21%
EBIT Next 5Y17.34%
FCF growth 1Y126.71%
FCF growth 3Y7.36%
FCF growth 5Y33.08%
OCF growth 1Y82.12%
OCF growth 3Y5.8%
OCF growth 5Y22.35%