ERICSSON (LM) TEL-SP ADR (ERIC) Stock Fundamental Analysis
NASDAQ:ERIC - Nasdaq - US2948216088 - ADR - Currency: USD
We assign a fundamental rating of 6 out of 10 to ERIC. ERIC was compared to 48 industry peers in the Communications Equipment industry. ERIC scores excellent on profitability, but there are some minor concerns on its financial health. ERIC is valued quite cheap, while showing a decent growth score. This is a good combination! Finally ERIC also has an excellent dividend rating.
1. Profitability
1.1 Basic Checks
In the past year ERIC was profitable.
In the past year ERIC had a positive cash flow from operations.
ERIC had positive earnings in 4 of the past 5 years.
In the past 5 years ERIC always reported a positive cash flow from operatings.
1.2 Ratios
With a decent Return On Assets value of 6.40%, ERIC is doing good in the industry, outperforming 77.08% of the companies in the same industry.
The Return On Equity of ERIC (19.95%) is better than 87.50% of its industry peers.
ERIC's Return On Invested Capital of 16.16% is amongst the best of the industry. ERIC outperforms 89.58% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for ERIC is below the industry average of 13.54%.
The last Return On Invested Capital (16.16%) for ERIC is above the 3 year average (10.59%), which is a sign of increasing profitability.
| 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
ERIC has a Profit Margin of 7.04%. This is in the better half of the industry: ERIC outperforms 77.08% of its industry peers.
In the last couple of years the Profit Margin of ERIC has declined.
ERIC's Operating Margin of 12.47% is fine compared to the rest of the industry. ERIC outperforms 79.17% of its industry peers.
ERIC's Operating Margin has improved in the last couple of years.
ERIC has a better Gross Margin (47.18%) than 62.50% of its industry peers.
In the last couple of years the Gross Margin of ERIC has grown nicely.
| 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.
ERIC has about the same amout of shares outstanding than it did 1 year ago.
ERIC has more shares outstanding than it did 5 years ago.
The debt/assets ratio for ERIC has been reduced compared to a year ago.
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.
With a decent Debt to FCF ratio value of 1.13, ERIC is doing good in the industry, outperforming 72.92% 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.
ERIC has a Debt to Equity ratio of 0.40. This is in the lower half of the industry: ERIC underperforms 60.42% of its industry peers.
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/WACC2.52
WACC6.41%
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.
The Current ratio of ERIC (1.09) is worse than 81.25% of its industry peers.
A Quick Ratio of 0.86 indicates that ERIC may have some problems paying its short term obligations.
ERIC's Quick ratio of 0.86 is on the low side compared to the rest of the industry. ERIC is outperformed by 75.00% of its industry peers.
| 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.
The earnings per share for ERIC 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, ERIC 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
The Earnings Per Share is expected to grow by 29.77% on average over the next years. This is a very strong growth
The Revenue is expected to decrease by -0.43% on average over the next years.
EPS Next Y267.53%
EPS Next 2Y93.12%
EPS Next 3Y58.42%
EPS Next 5Y29.77%
Revenue Next Year-3.26%
Revenue Next 2Y-1.2%
Revenue Next 3Y-0.31%
Revenue Next 5Y-0.43%
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 10.99.
Based on the Price/Earnings ratio, ERIC is valued cheaply inside the industry as 91.67% of the companies are valued more expensively.
Compared to an average S&P500 Price/Earnings ratio of 26.85, ERIC is valued rather cheaply.
A Price/Forward Earnings ratio of 11.50 indicates a reasonable valuation of ERIC.
Based on the Price/Forward Earnings ratio, ERIC is valued cheaply inside the industry as 85.42% of the companies are valued more expensively.
The average S&P500 Price/Forward Earnings ratio is at 34.98. ERIC is valued rather cheaply when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 10.99 | ||
| Fwd PE | 11.5 |
4.2 Price Multiples
ERIC's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. ERIC is cheaper than 93.75% of the companies in the same industry.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of ERIC indicates a rather cheap valuation: ERIC is cheaper than 97.92% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 6.31 | ||
| EV/EBITDA | 6.43 |
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.
ERIC has a very decent profitability rating, which may justify a higher PE ratio.
A more expensive valuation may be justified as ERIC's earnings are expected to grow with 58.42% in the coming years.
PEG (NY)0.04
PEG (5Y)N/A
EPS Next 2Y93.12%
EPS Next 3Y58.42%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 3.89%, ERIC has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 3.71, ERIC pays a better dividend. On top of this ERIC pays more dividend than 89.58% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.36, ERIC pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.89% |
5.2 History
The dividend of ERIC is nicely growing with an annual growth rate of 22.02%!
ERIC has paid a dividend for at least 10 years, which is a reliable track record.
ERIC has not decreased its dividend in the past 5 years, so it has a somewhat stable track record.
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 2Y93.12%
EPS Next 3Y58.42%
7.69
0 (0%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupTechnology Hardware & Equipment
GICS IndustryCommunications Equipment
Earnings (Last)
Earnings (Next)
Inst Owners46.79%
Inst Owner Change-3.53%
Ins Owners0.07%
Ins Owner ChangeN/A
Market Cap25.63B
Analysts56.55
Price Target8.24 (7.15%)
Short Float %0.97%
Short Ratio1.7
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.89% |
Yearly Dividend0.28
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)8.86%
PT rev (3m)-3.08%
EPS NQ rev (1m)-3.74%
EPS NQ rev (3m)-19.51%
EPS NY rev (1m)0.3%
EPS NY rev (3m)0.07%
Revenue NQ rev (1m)-5.07%
Revenue NQ rev (3m)-10.22%
Revenue NY rev (1m)-3.59%
Revenue NY rev (3m)-3.59%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 10.99 | ||
| Fwd PE | 11.5 | ||
| P/S | 1 | ||
| P/FCF | 6.31 | ||
| P/OCF | 5.77 | ||
| P/B | 2.82 | ||
| P/tB | 9.09 | ||
| EV/EBITDA | 6.43 |
EPS(TTM)0.7
EY9.1%
EPS(NY)0.67
Fwd EY8.7%
FCF(TTM)1.22
FCFY15.86%
OCF(TTM)1.33
OCFY17.32%
SpS7.72
BVpS2.72
TBVpS0.85
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
WACC6.41%
ROIC/WACC2.52
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 Y267.53%
EPS Next 2Y93.12%
EPS Next 3Y58.42%
EPS Next 5Y29.77%
Revenue 1Y (TTM)-1.47%
Revenue growth 3Y2.19%
Revenue growth 5Y1.76%
Sales Q2Q%-6.21%
Revenue Next Year-3.26%
Revenue Next 2Y-1.2%
Revenue Next 3Y-0.31%
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%