ERICSSON LM-A SHS (ERCG.DE) Stock Fundamental Analysis
Europe - FRA:ERCG - SE0000108649 - Common Stock
7.31 EUR
-0.02 (-0.27%)
ERCG gets a fundamental rating of 6 out of 10. The analysis compared the fundamentals against 29 industry peers in the Communications Equipment industry. ERCG scores excellent on profitability, but 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
With a decent Return On Assets value of 6.40%, ERCG is doing good in the industry, outperforming 72.41% of the companies in the same industry.
ERCG has a Return On Equity of 19.95%. This is in the better half of the industry: ERCG outperforms 79.31% of its industry peers.
ERCG has a Return On Invested Capital of 14.40%. 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 11.63%.
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
The Profit Margin of ERCG (7.04%) is better than 72.41% 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 79.31% of its industry peers.
ERCG's Operating Margin has improved in the last couple of years.
ERCG has a Gross Margin of 47.18%. This is comparable to the rest of the industry: ERCG outperforms 55.17% 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
The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so ERCG 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.
Compared to 1 year ago, ERCG has an improved debt to assets ratio.
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.
ERCG has a better Debt to FCF ratio (1.13) than 79.31% of its industry peers.
ERCG has a Debt/Equity ratio of 0.40. This is a healthy value indicating a solid balance between debt and equity.
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/WACC2.3
WACC6.26%
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 86.21% of its industry peers.
A Quick Ratio of 0.86 indicates that ERCG may have some problems paying its short term obligations.
With a Quick ratio value of 0.86, ERCG is not doing good in the industry: 86.21% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.09 | ||
| Quick Ratio | 0.86 |
3. Growth
3.1 Past
ERCG shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 1007.02%, which is quite impressive.
ERCG shows a very negative growth in Earnings Per Share. Measured over the last years, the EPS has been decreasing by -17.01% yearly.
ERCG shows a decrease in Revenue. In the last year, the revenue decreased by -1.47%.
The Revenue has been growing slightly by 1.76% on average over the past years.
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
ERCG is expected to show a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 29.10% yearly.
Based on estimates for the next years, ERCG will show a decrease in Revenue. The Revenue will decrease by -0.77% on average per year.
EPS Next Y271.88%
EPS Next 2Y89.39%
EPS Next 3Y55.91%
EPS Next 5Y29.1%
Revenue Next Year-3.55%
Revenue Next 2Y-1.45%
Revenue Next 3Y-0.62%
Revenue Next 5Y-0.77%
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
Based on the Price/Earnings ratio of 12.18, the valuation of ERCG can be described as correct.
Compared to the rest of the industry, the Price/Earnings ratio of ERCG indicates a rather cheap valuation: ERCG is cheaper than 93.10% of the companies listed in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 27.02, ERCG is valued rather cheaply.
A Price/Forward Earnings ratio of 13.14 indicates a correct valuation of ERCG.
Compared to the rest of the industry, the Price/Forward Earnings ratio of ERCG indicates a somewhat cheap valuation: ERCG is cheaper than 79.31% of the companies listed in the same industry.
When comparing the Price/Forward Earnings ratio of ERCG to the average of the S&P500 Index (22.57), we can say ERCG is valued slightly cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 12.18 | ||
| Fwd PE | 13.14 |
4.2 Price Multiples
86.21% of the companies in the same industry are more expensive than ERCG, based on the Enterprise Value to EBITDA ratio.
82.76% 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 | 6.91 | ||
| EV/EBITDA | 7.05 |
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.
A more expensive valuation may be justified as ERCG's earnings are expected to grow with 55.91% in the coming years.
PEG (NY)0.04
PEG (5Y)N/A
EPS Next 2Y89.39%
EPS Next 3Y55.91%
5. Dividend
5.1 Amount
ERCG has a Yearly Dividend Yield of 3.61%. Purely for dividend investing, there may be better candidates out there.
ERCG's Dividend Yield is rather good when compared to the industry average which is at 5.78. ERCG pays more dividend than 89.66% of the companies in the same industry.
ERCG's Dividend Yield is a higher than the S&P500 average which is at 2.44.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.61% |
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
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 2Y89.39%
EPS Next 3Y55.91%
FRA:ERCG (10/10/2025, 7:00:00 PM)
7.31
-0.02 (-0.27%)
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 Cap24.37B
Analysts56.43
Price Target7.27 (-0.55%)
Short Float %N/A
Short RatioN/A
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.61% |
Yearly Dividend0.25
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)-0.38%
PT rev (3m)-11.24%
EPS NQ rev (1m)-0.24%
EPS NQ rev (3m)-4.26%
EPS NY rev (1m)-1.05%
EPS NY rev (3m)1.18%
Revenue NQ rev (1m)-0.24%
Revenue NQ rev (3m)-5.04%
Revenue NY rev (1m)-0.09%
Revenue NY rev (3m)-3.89%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 12.18 | ||
| Fwd PE | 13.14 | ||
| P/S | 1.09 | ||
| P/FCF | 6.91 | ||
| P/OCF | 6.33 | ||
| P/B | 3.09 | ||
| P/tB | 9.96 | ||
| EV/EBITDA | 7.05 |
EPS(TTM)0.6
EY8.21%
EPS(NY)0.56
Fwd EY7.61%
FCF(TTM)1.06
FCFY14.47%
OCF(TTM)1.16
OCFY15.81%
SpS6.7
BVpS2.36
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
WACC6.26%
ROIC/WACC2.3
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 Y271.88%
EPS Next 2Y89.39%
EPS Next 3Y55.91%
EPS Next 5Y29.1%
Revenue 1Y (TTM)-1.47%
Revenue growth 3Y2.19%
Revenue growth 5Y1.76%
Sales Q2Q%-6.21%
Revenue Next Year-3.55%
Revenue Next 2Y-1.45%
Revenue Next 3Y-0.62%
Revenue Next 5Y-0.77%
EBIT growth 1Y72.11%
EBIT growth 3Y-10.75%
EBIT growth 5Y16.26%
EBIT Next Year81.48%
EBIT Next 3Y20.93%
EBIT Next 5Y13.49%
FCF growth 1Y321.76%
FCF growth 3Y7.36%
FCF growth 5Y33.08%
OCF growth 1Y167.74%
OCF growth 3Y5.8%
OCF growth 5Y22.35%