ERICSSON LM-A SHS (ERCG.DE) Stock Fundamental Analysis
Europe • Frankfurt Stock Exchange • FRA:ERCG • SE0000108649
9.19 EUR
-0.02 (-0.22%)
Last: Jan 30, 2026, 07:00 PM
ERCG gets a fundamental rating of 5 out of 10. The analysis compared the fundamentals against 31 industry peers in the Communications Equipment industry. ERCG scores excellent on profitability, 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. 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.
- In multiple years ERCG reported negative net income over the last 5 years.
- ERCG had a positive operating cash flow in 4 of the past 5 years.
1.2 Ratios
- ERCG has a better Return On Assets (8.72%) than 87.10% of its industry peers.
- Looking at the Return On Equity, with a value of 24.01%, ERCG belongs to the top of the industry, outperforming 93.55% of the companies in the same industry.
- With an excellent Return On Invested Capital value of 13.55%, ERCG belongs to the best of the industry, outperforming 87.10% of the companies in the same industry.
- The Average Return On Invested Capital over the past 3 years for ERCG is in line with the industry average of 10.63%.
- 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 has a Profit Margin of 10.26%. This is amongst the best in the industry. ERCG outperforms 83.87% of its industry peers.
- In the last couple of years the Profit Margin of ERCG has declined.
- The Operating Margin of ERCG (12.97%) is better than 80.65% of its industry peers.
- In the last couple of years the Operating Margin of ERCG has grown nicely.
- ERCG has a better Gross Margin (47.62%) than 61.29% of its industry peers.
- ERCG's Gross Margin has improved in the last couple of years.
| 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
- ERCG has a Return on Invested Capital (ROIC), which is just above the Cost of Capital (WACC), which means it is creating some value.
- There is no outstanding debt for ERCG. This means it has a Debt/Equity and Debt/FCF ratio of 0 and it is amongst the best of the sector and industry.
2.2 Solvency
- The Debt to FCF ratio of ERCG is 1.45, which is an excellent value as it means it would take ERCG, only 1.45 years of fcf income to pay off all of its debts.
- ERCG has a Debt to FCF ratio of 1.45. This is amongst the best in the industry. ERCG outperforms 80.65% 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/WACC1.77
WACC7.67%
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.
- ERCG's Current ratio of 1.17 is on the low side compared to the rest of the industry. ERCG is outperformed by 74.19% of its industry peers.
- 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 67.74% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.17 | ||
| Quick Ratio | 0.94 |
3. Growth
3.1 Past
- ERCG shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 413.40%, which is quite impressive.
- The Earnings Per Share has been growing by 8.51% on average over the past years. This is quite good.
EPS 1Y (TTM)413.4%
EPS 3Y11.79%
EPS 5Y8.51%
EPS Q2Q%15.04%
Revenue 1Y (TTM)N/A
Revenue growth 3YN/A
Revenue growth 5YN/A
Sales Q2Q%-8.73%
3.2 Future
- The Earnings Per Share is expected to decrease by -10.81% on average over the next years. This is quite bad
- Based on estimates for the next years, ERCG will show a decrease in Revenue. The Revenue will decrease by -0.79% on average per year.
EPS Next Y-23.51%
EPS Next 2Y-10.55%
EPS Next 3Y-9.63%
EPS Next 5Y-10.81%
Revenue Next Year-0.39%
Revenue Next 2Y0.82%
Revenue Next 3Y0.13%
Revenue Next 5Y-0.79%
3.3 Evolution
- The EPS 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
- ERCG is valuated reasonably with a Price/Earnings ratio of 11.07.
- ERCG's Price/Earnings ratio is rather cheap when compared to the industry. ERCG is cheaper than 93.55% of the companies in the same industry.
- The average S&P500 Price/Earnings ratio is at 28.30. ERCG is valued rather cheaply when compared to this.
- The Price/Forward Earnings ratio is 14.47, which indicates a correct valuation of ERCG.
- Compared to the rest of the industry, the Price/Forward Earnings ratio of ERCG indicates a rather cheap valuation: ERCG is cheaper than 87.10% of the companies listed in the same industry.
- ERCG's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 25.57.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 11.07 | ||
| Fwd PE | 14.47 |
4.2 Price Multiples
- Based on the Enterprise Value to EBITDA ratio, ERCG is valued cheaper than 87.10% of the companies in the same industry.
- 77.42% 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 | 10.64 | ||
| EV/EBITDA | 7.57 |
4.3 Compensation for Growth
- ERCG has an outstanding profitability rating, which may justify a higher PE ratio.
- A cheap valuation may be justified as ERCG's earnings are expected to decrease with -9.63% in the coming years.
PEG (NY)N/A
PEG (5Y)1.3
EPS Next 2Y-10.55%
EPS Next 3Y-9.63%
5. Dividend
5.1 Amount
- ERCG has a Yearly Dividend Yield of 3.32%.
- ERCG's Dividend Yield is rather good when compared to the industry average which is at 2.62. ERCG pays more dividend than 90.32% of the companies in the same industry.
- Compared to an average S&P500 Dividend Yield of 1.82, ERCG pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.32% |
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
- 37.84% of the earnings are spent on dividend by ERCG. This is a low number and sustainable payout ratio.
DP37.84%
EPS Next 2Y-10.55%
EPS Next 3Y-9.63%
ERICSSON LM-A SHS / ERCG.DE FAQ
Can you provide the ChartMill fundamental rating for ERICSSON LM-A SHS?
ChartMill assigns a fundamental rating of 5 / 10 to ERCG.DE.
What is the valuation status of ERICSSON LM-A SHS (ERCG.DE) stock?
ChartMill assigns a valuation rating of 6 / 10 to ERICSSON LM-A SHS (ERCG.DE). This can be considered as Fairly Valued.
What is the profitability of ERCG stock?
ERICSSON LM-A SHS (ERCG.DE) has a profitability rating of 8 / 10.
What are the PE and PB ratios of ERICSSON LM-A SHS (ERCG.DE) stock?
The Price/Earnings (PE) ratio for ERICSSON LM-A SHS (ERCG.DE) is 11.07 and the Price/Book (PB) ratio is 3.15.
How financially healthy is ERICSSON LM-A SHS?
The financial health rating of ERICSSON LM-A SHS (ERCG.DE) is 4 / 10.