ERICSSON (LM) TEL-SP ADR (ERIC) Stock Fundamental Analysis
NASDAQ:ERIC - Nasdaq - US2948216088 - ADR - Currency: USD
Taking everything into account, ERIC scores 5 out of 10 in our fundamental rating. ERIC was compared to 49 industry peers in the Communications Equipment industry. While ERIC belongs to the best of the industry regarding profitability, there are some minor concerns on its financial health. ERIC has a valuation in line with the averages, but it does not seem to be growing.
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.
ERIC had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
ERIC has a better Return On Assets (0.58%) than 63.27% of its industry peers.
ERIC has a better Return On Equity (1.87%) than 65.31% of its industry peers.
ERIC has a better Return On Invested Capital (14.44%) than 87.76% of its industry peers.
ERIC had an Average Return On Invested Capital over the past 3 years of 10.59%. This is in line with the industry average of 11.12%.
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
The Profit Margin of ERIC (0.65%) is better than 63.27% of its industry peers.
In the last couple of years the Profit Margin of ERIC has declined.
With a decent Operating Margin value of 10.72%, ERIC is doing good in the industry, outperforming 79.59% of the companies in the same industry.
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 61.22% 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
With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), 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.
ERIC's Debt to FCF ratio of 1.02 is fine compared to the rest of the industry. ERIC outperforms 75.51% of its industry peers.
A Debt/Equity ratio of 0.41 indicates that ERIC is not too dependend on debt financing.
Looking at the Debt to Equity ratio, with a value of 0.41, ERIC is in line with its industry, outperforming 40.82% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.41 | ||
| Debt/FCF | 1.02 | ||
| Altman-Z | N/A |
ROIC/WACC2.11
WACC6.86%
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.
Looking at the Current ratio, with a value of 1.09, ERIC is doing worse than 83.67% of the companies in the same industry.
ERIC has a Quick Ratio of 1.09. This is a bad value and indicates that ERIC is not financially healthy enough and could expect problems in meeting its short term obligations.
Looking at the Quick ratio, with a value of 0.88, ERIC is doing worse than 81.63% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.09 | ||
| Quick Ratio | 0.88 |
3. Growth
3.1 Past
The earnings per share for ERIC have decreased strongly by -46.92% in the last year.
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 -1.79%.
The Revenue has been growing slightly by 1.76% on average over the past years.
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
The Earnings Per Share is expected to grow by 45.40% on average over the next years. This is a very strong growth
The Revenue is expected to decrease by -0.82% on average over the next years.
EPS Next Y267.53%
EPS Next 2Y93.12%
EPS Next 3Y58.42%
EPS Next 5Y45.4%
Revenue Next Year0.78%
Revenue Next 2Y1.01%
Revenue Next 3Y1.39%
Revenue Next 5Y-0.82%
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
With a Price/Earnings ratio of 36.39, ERIC can be considered very expensive at the moment.
The rest of the industry has a similar Price/Earnings ratio as ERIC.
Compared to an average S&P500 Price/Earnings ratio of 28.10, ERIC is valued a bit more expensive.
A Price/Forward Earnings ratio of 12.64 indicates a correct valuation of ERIC.
Compared to the rest of the industry, the Price/Forward Earnings ratio of ERIC indicates a somewhat cheap valuation: ERIC is cheaper than 77.55% of the companies listed in the same industry.
When comparing the Price/Forward Earnings ratio of ERIC to the average of the S&P500 Index (20.74), we can say ERIC is valued slightly cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 36.39 | ||
| Fwd PE | 12.64 |
4.2 Price Multiples
89.80% of the companies in the same industry are more expensive than ERIC, based on the Enterprise Value to EBITDA ratio.
Based on the Price/Free Cash Flow ratio, ERIC is valued cheaply inside the industry as 89.80% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 6.45 | ||
| EV/EBITDA | 6.77 |
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 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 3.50%. Purely for dividend investing, there may be better candidates out there.
ERIC's Dividend Yield is rather good when compared to the industry average which is at 3.66. ERIC pays more dividend than 91.84% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.43, ERIC pays a bit more dividend than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.5% |
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
ERIC pays out 573.48% of its income as dividend. This is not a sustainable payout ratio.
The dividend of ERIC is growing, but earnings are growing more, so the dividend growth is sustainable.
DP573.48%
EPS Next 2Y93.12%
EPS Next 3Y58.42%
NASDAQ:ERIC (5/6/2025, 12:34:09 PM)
8.37
+0.12 (+1.45%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupTechnology Hardware & Equipment
GICS IndustryCommunications Equipment
Earnings (Last)
Earnings (Next)
Inst Owners52.48%
Inst Owner Change0.12%
Ins Owners0.03%
Ins Owner ChangeN/A
Market Cap27.89B
Analysts57.24
Price Target8.85 (5.73%)
Short Float %1.49%
Short Ratio1.65
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.5% |
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)2.02%
PT rev (3m)13.83%
EPS NQ rev (1m)30.69%
EPS NQ rev (3m)24.25%
EPS NY rev (1m)-4.14%
EPS NY rev (3m)-6.29%
Revenue NQ rev (1m)-2.79%
Revenue NQ rev (3m)-3.12%
Revenue NY rev (1m)-2.59%
Revenue NY rev (3m)-2.7%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 36.39 | ||
| Fwd PE | 12.64 | ||
| P/S | 1.08 | ||
| P/FCF | 6.45 | ||
| P/OCF | 5.9 | ||
| P/B | 3.13 | ||
| P/tB | 11.61 | ||
| EV/EBITDA | 6.77 |
EPS(TTM)0.23
EY2.75%
EPS(NY)0.66
Fwd EY7.91%
FCF(TTM)1.3
FCFY15.5%
OCF(TTM)1.42
OCFY16.94%
SpS7.77
BVpS2.68
TBVpS0.72
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
WACC6.86%
ROIC/WACC2.11
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 5Y45.4%
Revenue 1Y (TTM)-1.79%
Revenue growth 3Y2.19%
Revenue growth 5Y1.76%
Sales Q2Q%3.19%
Revenue Next Year0.78%
Revenue Next 2Y1.01%
Revenue Next 3Y1.39%
Revenue Next 5Y-0.82%
EBIT growth 1Y48.21%
EBIT growth 3Y-10.75%
EBIT growth 5Y16.26%
EBIT Next Year70.53%
EBIT Next 3Y22.61%
EBIT Next 5Y17.34%
FCF growth 1Y126.71%
FCF growth 3Y7.36%
FCF growth 5Y33.08%
OCF growth 1Y82.12%
OCF growth 3Y5.8%
OCF growth 5Y22.35%