ERICSSON (LM) TEL-SP ADR (ERIC) Stock Fundamental Analysis
NASDAQ:ERIC - Nasdaq - US2948216088 - ADR - Currency: USD
Overall ERIC gets a fundamental rating of 5 out of 10. We evaluated ERIC against 50 industry peers in the Communications Equipment industry. ERIC scores excellent on profitability, but there are some minor concerns on its financial health. ERIC has a valuation in line with the averages, but on the other hand it scores bad on growth.
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.
Each year in the past 5 years ERIC had a positive operating cash flow.
1.2 Ratios
With a decent Return On Assets value of 0.58%, ERIC is doing good in the industry, outperforming 64.00% of the companies in the same industry.
The Return On Equity of ERIC (1.87%) is better than 66.00% of its industry peers.
With an excellent Return On Invested Capital value of 14.44%, ERIC belongs to the best of the industry, outperforming 90.00% of the companies in the same industry.
Measured over the past 3 years, the Average Return On Invested Capital for ERIC is below the industry average of 13.82%.
The 3 year average ROIC (10.59%) for ERIC is below the current ROIC(14.44%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 0.58% | ||
| ROE | 1.87% | ||
| ROIC | 14.44% |
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
Looking at the Profit Margin, with a value of 0.65%, ERIC is in the better half of the industry, outperforming 64.00% of the companies in the same industry.
In the last couple of years the Profit Margin of ERIC has declined.
ERIC has a Operating Margin of 10.72%. This is in the better half of the industry: ERIC outperforms 78.00% of its industry peers.
ERIC's Operating Margin has improved in the last couple of years.
ERIC's Gross Margin of 46.21% is fine compared to the rest of the industry. ERIC outperforms 62.00% of its industry peers.
In the last couple of years the Gross Margin of ERIC 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
The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so ERIC is creating value.
Compared to 1 year ago, ERIC has about the same amount of shares outstanding.
Compared to 5 years ago, ERIC has more shares outstanding
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 1.02, which is an excellent value as it means it would take ERIC, only 1.02 years of fcf income to pay off all of its debts.
Looking at the Debt to FCF ratio, with a value of 1.02, ERIC is in the better half of the industry, outperforming 76.00% of the companies in the same industry.
A Debt/Equity ratio of 0.41 indicates that ERIC is not too dependend on debt financing.
With a Debt to Equity ratio value of 0.41, ERIC is not doing good in the industry: 60.00% of the companies in the same industry are doing better.
Although ERIC does not score too well on debt/equity it has very limited outstanding debt, which is well covered by the FCF. We will not put too much weight on the debt/equity number as it may be because of low equity, which could be a consequence of a share buyback program for instance. This needs to be investigated.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.41 | ||
| Debt/FCF | 1.02 | ||
| Altman-Z | N/A |
ROIC/WACC2.44
WACC5.91%
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.
ERIC has a Current ratio of 1.09. This is amonst the worse of the industry: ERIC underperforms 80.00% of its industry peers.
A Quick Ratio of 0.88 indicates that ERIC may have some problems paying its short term obligations.
ERIC's Quick ratio of 0.88 is on the low side compared to the rest of the industry. ERIC is outperformed by 74.00% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.09 | ||
| Quick Ratio | 0.88 |
3. Growth
3.1 Past
ERIC shows a strong negative growth in Earnings Per Share. In the last year the EPS decreased by -46.92%.
ERIC shows a very negative growth in Earnings Per Share. Measured over the last years, the EPS has been decreasing by -17.01% yearly.
The Revenue has decreased by -1.79% 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)-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
ERIC is expected to show a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 29.89% yearly.
The Revenue is expected to grow by 0.40% on average over the next years.
EPS Next Y267.53%
EPS Next 2Y93.12%
EPS Next 3Y58.42%
EPS Next 5Y29.89%
Revenue Next Year0.35%
Revenue Next 2Y0.68%
Revenue Next 3Y1.13%
Revenue Next 5Y0.4%
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
Based on the Price/Earnings ratio of 37.13, the valuation of ERIC can be described as expensive.
The rest of the industry has a similar Price/Earnings ratio as ERIC.
Compared to an average S&P500 Price/Earnings ratio of 27.45, ERIC is valued a bit more expensive.
With a Price/Forward Earnings ratio of 12.78, ERIC is valued correctly.
Based on the Price/Forward Earnings ratio, ERIC is valued a bit cheaper than 78.00% of the companies in the same industry.
When comparing the Price/Forward Earnings ratio of ERIC to the average of the S&P500 Index (21.90), we can say ERIC is valued slightly cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 37.13 | ||
| Fwd PE | 12.78 |
4.2 Price Multiples
ERIC's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. ERIC is cheaper than 94.00% 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 96.00% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 6.52 | ||
| EV/EBITDA | 6.95 |
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 ERIC may justify a higher PE ratio.
ERIC's earnings are expected to grow with 58.42% in the coming years. This may justify a more expensive valuation.
PEG (NY)0.14
PEG (5Y)N/A
EPS Next 2Y93.12%
EPS Next 3Y58.42%
5. Dividend
5.1 Amount
ERIC has a Yearly Dividend Yield of 3.58%. Purely for dividend investing, there may be better candidates out there.
Compared to an average industry Dividend Yield of 3.49, ERIC pays a better dividend. On top of this ERIC pays more dividend than 92.00% of the companies listed in the same industry.
ERIC's Dividend Yield is a higher than the S&P500 average which is at 2.42.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.58% |
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.
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
573.48% of the earnings are spent on dividend by ERIC. This is not a sustainable payout ratio.
ERIC's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP573.48%
EPS Next 2Y93.12%
EPS Next 3Y58.42%
8.54
0 (0%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupTechnology Hardware & Equipment
GICS IndustryCommunications Equipment
Earnings (Last)
Earnings (Next)
Inst Owners46.79%
Inst Owner Change0.59%
Ins Owners0.07%
Ins Owner ChangeN/A
Market Cap28.47B
Analysts57.24
Price Target8.58 (0.47%)
Short Float %1.68%
Short Ratio2.12
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.58% |
Yearly Dividend0.28
Dividend Growth(5Y)22.02%
DP573.48%
Div Incr Years5
Div Non Decr Years5
Ex-Date
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)0.92%
PT rev (3m)-1.09%
EPS NQ rev (1m)-0.01%
EPS NQ rev (3m)30.67%
EPS NY rev (1m)-0.01%
EPS NY rev (3m)-4.16%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)-2.79%
Revenue NY rev (1m)0%
Revenue NY rev (3m)-3%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 37.13 | ||
| Fwd PE | 12.78 | ||
| P/S | 1.09 | ||
| P/FCF | 6.52 | ||
| P/OCF | 5.97 | ||
| P/B | 3.16 | ||
| P/tB | 11.74 | ||
| EV/EBITDA | 6.95 |
EPS(TTM)0.23
EY2.69%
EPS(NY)0.67
Fwd EY7.83%
FCF(TTM)1.31
FCFY15.34%
OCF(TTM)1.43
OCFY16.75%
SpS7.84
BVpS2.7
TBVpS0.73
PEG (NY)0.14
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 0.58% | ||
| ROE | 1.87% | ||
| ROCE | 18.28% | ||
| ROIC | 14.44% | ||
| ROICexc | 21.87% | ||
| ROICexgc | 62.61% | ||
| 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)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 Turnover0.9
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
WACC5.91%
ROIC/WACC2.44
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 5Y29.89%
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 5Y0.4%
EBIT growth 1Y48.21%
EBIT growth 3Y-10.75%
EBIT growth 5Y16.26%
EBIT Next Year84.47%
EBIT Next 3Y23.21%
EBIT Next 5Y11.76%
FCF growth 1Y126.71%
FCF growth 3Y7.36%
FCF growth 5Y33.08%
OCF growth 1Y82.12%
OCF growth 3Y5.8%
OCF growth 5Y22.35%