ERICSSON (LM) TEL-SP ADR (ERIC) Stock Fundamental Analysis
USA - NASDAQ:ERIC - US2948216088 - ADR
8.42 USD
+0.07 (+0.84%)
8.42 USD
0 (0%)
Overall ERIC gets a fundamental rating of 6 out of 10. We evaluated ERIC against 48 industry peers in the Communications Equipment industry. While ERIC has a great profitability rating, there are some minor concerns on its financial health. A decent growth rate in combination with a cheap valuation! Better keep an eye on ERIC. ERIC also has an excellent dividend rating.
1. Profitability
1.1 Basic Checks
ERIC had positive earnings in the past year.
In the past year ERIC had a positive cash flow from operations.
ERIC had positive earnings in 4 of the past 5 years.
Each year in the past 5 years ERIC had a positive operating cash flow.
1.2 Ratios
ERIC has a Return On Assets of 6.40%. This is in the better half of the industry: ERIC outperforms 77.08% of its industry peers.
ERIC has a Return On Equity of 19.95%. This is amongst the best in the industry. ERIC outperforms 87.50% of its industry peers.
Looking at the Return On Invested Capital, with a value of 16.16%, ERIC belongs to the top of the industry, outperforming 89.58% of the companies in the same industry.
ERIC had an Average Return On Invested Capital over the past 3 years of 10.59%. This is below the industry average of 13.71%.
The 3 year average ROIC (10.59%) for ERIC is below the current ROIC(16.16%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 6.4% | ||
| ROE | 19.95% | ||
| ROIC | 16.16% |
ROA(3y)-1.18%
ROA(5y)2.06%
ROE(3y)-4.3%
ROE(5y)5.63%
ROIC(3y)10.59%
ROIC(5y)12.19%
1.3 Margins
The Profit Margin of ERIC (7.04%) is better than 75.00% of its industry peers.
In the last couple of years the Profit Margin of ERIC has declined.
ERIC has a better Operating Margin (12.47%) than 79.17% of its industry peers.
ERIC's Operating Margin has improved in the last couple of years.
ERIC has a Gross Margin of 47.18%. This is in the better half of the industry: ERIC outperforms 62.50% of its industry peers.
ERIC'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
With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), ERIC is creating value.
The number of shares outstanding for ERIC remains at a similar level compared to 1 year ago.
The number of shares outstanding for ERIC has been increased compared to 5 years ago.
ERIC has a better debt/assets ratio than last year.
2.2 Solvency
The Debt to FCF ratio of ERIC is 1.13, which is an excellent value as it means it would take ERIC, 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, ERIC is in the better half of the industry, outperforming 70.83% of the companies in the same industry.
ERIC has a Debt/Equity ratio of 0.40. This is a healthy value indicating a solid balance between debt and equity.
With a Debt to Equity ratio value of 0.40, ERIC is not doing good in the industry: 66.67% of the companies in the same industry are doing better.
Even though the debt/equity ratio score it not favorable for ERIC, it has very limited outstanding debt, so we won't put too much weight on the DE evaluation.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.4 | ||
| Debt/FCF | 1.13 | ||
| Altman-Z | N/A |
ROIC/WACC2.64
WACC6.13%
2.3 Liquidity
ERIC has a Current Ratio of 1.09. This is a normal value and indicates that ERIC is financially healthy and should not expect problems in meeting its short term obligations.
With a Current ratio value of 1.09, ERIC is not doing good in the industry: 85.42% of the companies in the same industry are doing better.
A Quick Ratio of 0.86 indicates that ERIC may have some problems paying its short term obligations.
Looking at the Quick ratio, with a value of 0.86, ERIC is doing worse than 79.17% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.09 | ||
| Quick Ratio | 0.86 |
3. Growth
3.1 Past
ERIC shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 1007.02%, which is quite impressive.
ERIC shows a very negative growth in Earnings Per Share. Measured over the last years, the EPS has been decreasing by -17.01% yearly.
ERIC 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
Based on estimates for the next years, ERIC will show a very strong growth in Earnings Per Share. The EPS will grow by 29.53% on average per year.
Based on estimates for the next years, ERIC will show a decrease in Revenue. The Revenue will decrease by -0.57% on average per year.
EPS Next Y271.88%
EPS Next 2Y89.39%
EPS Next 3Y55.91%
EPS Next 5Y29.53%
Revenue Next Year-3.47%
Revenue Next 2Y-1.38%
Revenue Next 3Y-0.56%
Revenue Next 5Y-0.57%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
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
ERIC is valuated reasonably with a Price/Earnings ratio of 11.86.
Compared to the rest of the industry, the Price/Earnings ratio of ERIC indicates a rather cheap valuation: ERIC is cheaper than 87.50% of the companies listed in the same industry.
ERIC is valuated cheaply when we compare the Price/Earnings ratio to 27.86, which is the current average of the S&P500 Index.
With a Price/Forward Earnings ratio of 12.83, ERIC is valued correctly.
Based on the Price/Forward Earnings ratio, ERIC is valued cheaply inside the industry as 85.42% of the companies are valued more expensively.
Compared to an average S&P500 Price/Forward Earnings ratio of 23.32, ERIC is valued a bit cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 11.86 | ||
| Fwd PE | 12.83 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of ERIC indicates a rather cheap valuation: ERIC is cheaper than 91.67% of the companies listed in the same industry.
97.92% of the companies in the same industry are more expensive than ERIC, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 6.77 | ||
| EV/EBITDA | 6.85 |
4.3 Compensation for Growth
ERIC's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
The decent profitability rating of ERIC may justify a higher PE ratio.
ERIC's earnings are expected to grow with 55.91% in the coming years. This may justify a more expensive valuation.
PEG (NY)0.04
PEG (5Y)N/A
EPS Next 2Y89.39%
EPS Next 3Y55.91%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 3.68%, ERIC has a reasonable but not impressive dividend return.
ERIC's Dividend Yield is rather good when compared to the industry average which is at 3.67. ERIC pays more dividend than 91.67% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.41, ERIC pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.68% |
5.2 History
On average, the dividend of ERIC grows each year by 22.02%, which is quite nice.
ERIC has been paying a dividend for at least 10 years, so it has a reliable track record.
As ERIC did not decrease their dividend in the past 5 years, we can say the dividend looks stable.
Dividend Growth(5Y)22.02%
Div Incr Years5
Div Non Decr Years5
5.3 Sustainability
53.91% of the earnings are spent on dividend by ERIC. This is a bit on the high side, but may be sustainable.
The dividend of ERIC is growing, but earnings are growing more, so the dividend growth is sustainable.
DP53.91%
EPS Next 2Y89.39%
EPS Next 3Y55.91%
8.42
+0.07 (+0.84%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupTechnology Hardware & Equipment
GICS IndustryCommunications Equipment
Earnings (Last)
Earnings (Next)
Inst Owners54.97%
Inst Owner Change-3.54%
Ins Owners0.07%
Ins Owner ChangeN/A
Market Cap28.07B
Analysts56.43
Price Target8.53 (1.31%)
Short Float %1.13%
Short Ratio2.99
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.68% |
Yearly Dividend0.29
Dividend Growth(5Y)22.02%
DP53.91%
Div Incr Years5
Div Non Decr Years5
Ex-Date
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)2.66%
PT rev (3m)-0.47%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-19.5%
EPS NY rev (1m)-1.05%
EPS NY rev (3m)1.27%
Revenue NQ rev (1m)0.27%
Revenue NQ rev (3m)-9.97%
Revenue NY rev (1m)-0.01%
Revenue NY rev (3m)-3.8%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 11.86 | ||
| Fwd PE | 12.83 | ||
| P/S | 1.07 | ||
| P/FCF | 6.77 | ||
| P/OCF | 6.2 | ||
| P/B | 3.03 | ||
| P/tB | 9.76 | ||
| EV/EBITDA | 6.85 |
EPS(TTM)0.71
EY8.43%
EPS(NY)0.66
Fwd EY7.8%
FCF(TTM)1.24
FCFY14.78%
OCF(TTM)1.36
OCFY16.14%
SpS7.88
BVpS2.78
TBVpS0.86
PEG (NY)0.04
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 6.4% | ||
| ROE | 19.95% | ||
| ROCE | 20.46% | ||
| ROIC | 16.16% | ||
| ROICexc | 22.13% | ||
| ROICexgc | 48.84% | ||
| 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)10.59%
ROIC(5y)12.19%
ROICexc(3y)14.83%
ROICexc(5y)17.86%
ROICexgc(3y)47.09%
ROICexgc(5y)43.4%
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
WACC6.13%
ROIC/WACC2.64
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 5Y29.53%
Revenue 1Y (TTM)-1.47%
Revenue growth 3Y2.19%
Revenue growth 5Y1.76%
Sales Q2Q%-6.21%
Revenue Next Year-3.47%
Revenue Next 2Y-1.38%
Revenue Next 3Y-0.56%
Revenue Next 5Y-0.57%
EBIT growth 1Y72.11%
EBIT growth 3Y-10.75%
EBIT growth 5Y16.26%
EBIT Next Year81.48%
EBIT Next 3Y20.93%
EBIT Next 5Y14%
FCF growth 1Y321.76%
FCF growth 3Y7.36%
FCF growth 5Y33.08%
OCF growth 1Y167.74%
OCF growth 3Y5.8%
OCF growth 5Y22.35%