ERICSSON (LM) TEL-SP ADR (ERIC) Stock Fundamental Analysis
USA - NASDAQ:ERIC - US2948216088 - ADR
9.45 USD
-0.03 (-0.32%)
9.39 USD
-0.06 (-0.63%)
ERIC gets a fundamental rating of 6 out of 10. The analysis compared the fundamentals against 48 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 scores decently on growth, while it is valued quite cheap. This could make an interesting combination. ERIC also has an excellent dividend rating.
1. Profitability
1.1 Basic Checks
ERIC had positive earnings in the past year.
ERIC had a positive operating cash flow in the past year.
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 8.72%. This is amongst the best in the industry. ERIC outperforms 83.33% of its industry peers.
ERIC has a Return On Equity of 24.01%. This is amongst the best in the industry. ERIC outperforms 89.58% of its industry peers.
The Return On Invested Capital of ERIC (15.20%) is better than 89.58% of its industry peers.
ERIC had an Average Return On Invested Capital over the past 3 years of 10.59%. This is below the industry average of 12.93%.
The 3 year average ROIC (10.59%) for ERIC is below the current ROIC(15.20%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 8.72% | ||
| ROE | 24.01% | ||
| ROIC | 15.2% |
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 (10.26%) is better than 83.33% of its industry peers.
ERIC's Profit Margin has declined in the last couple of years.
With a decent Operating Margin value of 12.97%, ERIC is doing good in the industry, outperforming 79.17% of the companies in the same industry.
ERIC's Operating Margin has improved in the last couple of years.
Looking at the Gross Margin, with a value of 47.62%, ERIC is in the better half of the industry, outperforming 62.50% of the companies in the same industry.
In the last couple of years the Gross Margin of ERIC has grown nicely.
| 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
ERIC has a Return on Invested Capital (ROIC), which is well above the Cost of Capital (WACC), which means it is creating value.
The number of shares outstanding for ERIC remains at a similar level compared to 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
ERIC has a debt to FCF ratio of 1.45. This is a very positive value and a sign of high solvency as it would only need 1.45 years to pay back of all of its debts.
The Debt to FCF ratio of ERIC (1.45) is better than 68.75% of its industry peers.
A Debt/Equity ratio of 0.35 indicates that ERIC is not too dependend on debt financing.
The Debt to Equity ratio of ERIC (0.35) is worse than 66.67% of its industry peers.
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 | 0.35 | ||
| Debt/FCF | 1.45 | ||
| Altman-Z | N/A |
ROIC/WACC2.27
WACC6.69%
2.3 Liquidity
ERIC has a Current Ratio of 1.17. 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 (1.17) is worse than 83.33% of its industry peers.
A Quick Ratio of 0.94 indicates that ERIC may have some problems paying its short term obligations.
With a Quick ratio value of 0.94, ERIC is not doing good in the industry: 77.08% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.17 | ||
| Quick Ratio | 0.94 |
3. Growth
3.1 Past
ERIC shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 395.75%, which is quite impressive.
Measured over the past years, ERIC shows a very negative growth in Earnings Per Share. The EPS has been decreasing by -17.01% on average per year.
ERIC shows a decrease in Revenue. In the last year, the revenue decreased by -2.65%.
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)395.75%
EPS 3Y-38.27%
EPS 5Y-17.01%
EPS Q2Q%-5.34%
Revenue 1Y (TTM)-2.65%
Revenue growth 3Y2.19%
Revenue growth 5Y1.76%
Sales Q2Q%-10.28%
3.2 Future
ERIC is expected to show a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 29.10% yearly.
Based on estimates for the next years, ERIC will show a decrease in Revenue. The Revenue will decrease by -0.77% on average per year.
EPS Next Y271.88%
EPS Next 2Y89.39%
EPS Next 3Y55.91%
EPS Next 5Y29.1%
Revenue Next Year-3.55%
Revenue Next 2Y-1.45%
Revenue Next 3Y-0.62%
Revenue Next 5Y-0.77%
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
The Revenue 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
A Price/Earnings ratio of 13.50 indicates a correct valuation of ERIC.
85.42% of the companies in the same industry are more expensive than ERIC, based on the Price/Earnings ratio.
When comparing the Price/Earnings ratio of ERIC to the average of the S&P500 Index (26.91), we can say ERIC is valued slightly cheaper.
ERIC is valuated correctly with a Price/Forward Earnings ratio of 14.49.
ERIC's Price/Forward Earnings ratio is rather cheap when compared to the industry. ERIC is cheaper than 83.33% of the companies in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 22.92. ERIC is valued slightly cheaper when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 13.5 | ||
| Fwd PE | 14.49 |
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 95.83% of the companies listed in the same industry.
Based on the Price/Free Cash Flow ratio, ERIC is valued cheaper than 91.67% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 9.76 | ||
| EV/EBITDA | 6.91 |
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 excellent profitability rating of ERIC may justify a higher PE ratio.
A more expensive valuation may be justified as ERIC's earnings are expected to grow with 55.91% in the coming years.
PEG (NY)0.05
PEG (5Y)N/A
EPS Next 2Y89.39%
EPS Next 3Y55.91%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 3.15%, 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 3.55. ERIC pays more dividend than 89.58% of the companies in the same industry.
ERIC's Dividend Yield is a higher than the S&P500 average which is at 2.34.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.15% |
5.2 History
On average, the dividend of ERIC grows each year by 22.02%, which is quite nice.
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
37.84% of the earnings are spent on dividend by ERIC. This is a low number and sustainable payout ratio.
The dividend of ERIC is growing, but earnings are growing more, so the dividend growth is sustainable.
DP37.84%
EPS Next 2Y89.39%
EPS Next 3Y55.91%
9.45
-0.03 (-0.32%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupTechnology Hardware & Equipment
GICS IndustryCommunications Equipment
Earnings (Last)
Earnings (Next)
Inst Owners54.97%
Inst Owner Change0.01%
Ins Owners0.07%
Ins Owner ChangeN/A
Market Cap31.50B
Revenue(TTM)240.31B
Net Income(TTM)24.64B
Analysts56.43
Price Target8.46 (-10.48%)
Short Float %1.14%
Short Ratio2.36
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.15% |
Yearly Dividend0.29
Dividend Growth(5Y)22.02%
DP37.84%
Div Incr Years5
Div Non Decr Years5
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)-0.35%
Min EPS beat(2)-21.32%
Max EPS beat(2)20.62%
EPS beat(4)2
Avg EPS beat(4)9.6%
Min EPS beat(4)-21.32%
Max EPS beat(4)49.81%
EPS beat(8)5
Avg EPS beat(8)-42.25%
EPS beat(12)8
Avg EPS beat(12)-19.96%
EPS beat(16)9
Avg EPS beat(16)-14.95%
Revenue beat(2)0
Avg Revenue beat(2)-4.34%
Min Revenue beat(2)-6.39%
Max Revenue beat(2)-2.29%
Revenue beat(4)0
Avg Revenue beat(4)-2.81%
Min Revenue beat(4)-6.39%
Max Revenue beat(4)-0.45%
Revenue beat(8)1
Avg Revenue beat(8)-2.49%
Revenue beat(12)3
Avg Revenue beat(12)-1.62%
Revenue beat(16)7
Avg Revenue beat(16)-0.77%
PT rev (1m)-0.93%
PT rev (3m)11.77%
EPS NQ rev (1m)-6.51%
EPS NQ rev (3m)-31.88%
EPS NY rev (1m)-1.08%
EPS NY rev (3m)1.46%
Revenue NQ rev (1m)-1.18%
Revenue NQ rev (3m)-11.66%
Revenue NY rev (1m)-0.09%
Revenue NY rev (3m)-3.89%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 13.5 | ||
| Fwd PE | 14.49 | ||
| P/S | 1.23 | ||
| P/FCF | 9.76 | ||
| P/OCF | 8.74 | ||
| P/B | 2.89 | ||
| P/tB | 6.62 | ||
| EV/EBITDA | 6.91 |
EPS(TTM)0.7
EY7.41%
EPS(NY)0.65
Fwd EY6.9%
FCF(TTM)0.97
FCFY10.25%
OCF(TTM)1.08
OCFY11.45%
SpS7.65
BVpS3.27
TBVpS1.43
PEG (NY)0.05
PEG (5Y)N/A
Graham Number7.18
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 8.72% | ||
| ROE | 24.01% | ||
| ROCE | 19.24% | ||
| ROIC | 15.2% | ||
| ROICexc | 22.2% | ||
| ROICexgc | 46.36% | ||
| OM | 12.97% | ||
| PM (TTM) | 10.26% | ||
| GM | 47.62% | ||
| FCFM | 12.65% |
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%
ROICexgc growth 3Y9.12%
ROICexgc 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-Score6
Asset Turnover0.85
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.35 | ||
| Debt/FCF | 1.45 | ||
| Debt/EBITDA | 0.87 | ||
| Cap/Depr | 36.83% | ||
| Cap/Sales | 1.48% | ||
| Interest Coverage | 13.31 | ||
| Cash Conversion | 83.18% | ||
| Profit Quality | 123.37% | ||
| Current Ratio | 1.17 | ||
| Quick Ratio | 0.94 | ||
| Altman-Z | N/A |
F-Score6
WACC6.69%
ROIC/WACC2.27
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)395.75%
EPS 3Y-38.27%
EPS 5Y-17.01%
EPS Q2Q%-5.34%
EPS Next Y271.88%
EPS Next 2Y89.39%
EPS Next 3Y55.91%
EPS Next 5Y29.1%
Revenue 1Y (TTM)-2.65%
Revenue growth 3Y2.19%
Revenue growth 5Y1.76%
Sales Q2Q%-10.28%
Revenue Next Year-3.55%
Revenue Next 2Y-1.45%
Revenue Next 3Y-0.62%
Revenue Next 5Y-0.77%
EBIT growth 1Y54.66%
EBIT growth 3Y-10.75%
EBIT growth 5Y16.26%
EBIT Next Year81.48%
EBIT Next 3Y20.93%
EBIT Next 5Y13.49%
FCF growth 1Y392.6%
FCF growth 3Y7.36%
FCF growth 5Y33.08%
OCF growth 1Y169.74%
OCF growth 3Y5.8%
OCF growth 5Y22.35%
ERICSSON (LM) TEL-SP ADR / ERIC FAQ
What is the fundamental rating for ERIC stock?
ChartMill assigns a fundamental rating of 6 / 10 to ERIC.
Can you provide the valuation status for ERICSSON (LM) TEL-SP ADR?
ChartMill assigns a valuation rating of 8 / 10 to ERICSSON (LM) TEL-SP ADR (ERIC). This can be considered as Undervalued.
How profitable is ERICSSON (LM) TEL-SP ADR (ERIC) stock?
ERICSSON (LM) TEL-SP ADR (ERIC) has a profitability rating of 8 / 10.
Can you provide the PE and PB ratios for ERIC stock?
The Price/Earnings (PE) ratio for ERICSSON (LM) TEL-SP ADR (ERIC) is 13.5 and the Price/Book (PB) ratio is 2.89.
Can you provide the financial health for ERIC stock?
The financial health rating of ERICSSON (LM) TEL-SP ADR (ERIC) is 4 / 10.