ERICSSON (LM) TEL-SP ADR (ERIC)
US2948216088 - ADR
We assign a fundamental rating of 4 out of 10 to ERIC. ERIC was compared to 54 industry peers in the Communications Equipment industry. There are concerns on the financial health of ERIC while its profitability can be described as average. ERIC is not valued too expensively and it also shows a decent growth rate.
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
ERIC has a Return On Assets of -8.48%. This is in the lower half of the industry: ERIC underperforms 64.81% of its industry peers.
The Return On Equity of ERIC (-23.28%) is worse than 66.67% of its industry peers.
Looking at the Return On Invested Capital, with a value of 8.00%, ERIC belongs to the top of the industry, outperforming 83.33% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for ERIC is in line with the industry average of 10.42%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | -8.48% | ||
| ROE | -23.28% | ||
| ROIC | 8% |
ROA(3y)1.29%
ROA(5y)2.22%
ROE(3y)2.65%
ROE(5y)6.16%
ROIC(3y)11.26%
ROIC(5y)10.73%
1.3 Margins
Looking at the Operating Margin, with a value of 7.10%, ERIC is in the better half of the industry, outperforming 74.07% of the companies in the same industry.
ERIC's Operating Margin has improved in the last couple of years.
With a Gross Margin value of 40.24%, ERIC perfoms like the industry average, outperforming 57.41% 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 | 7.1% | ||
| PM (TTM) | N/A | ||
| GM | 40.24% |
OM growth 3Y-18.28%
OM growth 5Y8.55%
PM growth 3YN/A
PM growth 5YN/A
GM growth 3Y-0.83%
GM growth 5Y2.43%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is just above the Cost of Capital (WACC), so ERIC is still creating some value.
The number of shares outstanding for ERIC remains at a similar level compared to 1 year ago.
Compared to 5 years ago, ERIC has more shares outstanding
The debt/assets ratio for ERIC is higher compared to a year ago.
2.2 Solvency
The Debt to FCF ratio of ERIC is 3.66, which is a good value as it means it would take ERIC, 3.66 years of fcf income to pay off all of its debts.
The Debt to FCF ratio of ERIC (3.66) is better than 62.96% of its industry peers.
A Debt/Equity ratio of 0.35 indicates that ERIC is not too dependend on debt financing.
ERIC's Debt to Equity ratio of 0.35 is on the low side compared to the rest of the industry. ERIC is outperformed by 62.96% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.35 | ||
| Debt/FCF | 3.66 | ||
| Altman-Z | N/A |
ROIC/WACC1.26
WACC6.35%
2.3 Liquidity
A Current Ratio of 1.22 indicates that ERIC should not have too much problems paying its short term obligations.
Looking at the Current ratio, with a value of 1.22, ERIC is doing worse than 79.63% of the companies in the same industry.
A Quick Ratio of 0.94 indicates that ERIC may have some problems paying its short term obligations.
ERIC's Quick ratio of 0.94 is on the low side compared to the rest of the industry. ERIC is outperformed by 75.93% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.22 | ||
| Quick Ratio | 0.94 |
3. Growth
3.1 Past
ERIC shows a strong negative growth in Earnings Per Share. In the last year the EPS decreased by -34.25%.
The Earnings Per Share has been growing by 48.91% on average over the past years. This is a very strong growth
The Revenue has decreased by -8.93% in the past year.
Measured over the past years, ERIC shows a small growth in Revenue. The Revenue has been growing by 4.55% on average per year.
EPS 1Y (TTM)-34.25%
EPS 3Y-9.51%
EPS 5Y48.91%
EPS growth Q2Q-16.16%
Revenue 1Y (TTM)-8.93%
Revenue growth 3Y4.26%
Revenue growth 5Y4.55%
Revenue growth Q2Q-14.75%
3.2 Future
The Earnings Per Share is expected to grow by 10.55% on average over the next years. This is quite good.
Based on estimates for the next years, ERIC will show a small growth in Revenue. The Revenue will grow by 2.38% on average per year.
EPS Next Y11.59%
EPS Next 2Y17.23%
EPS Next 3Y15.73%
EPS Next 5Y10.55%
Revenue Next Year-3.41%
Revenue Next 2Y-0.21%
Revenue Next 3Y1.02%
Revenue Next 5Y2.38%
3.3 Evolution
The estimated forward EPS growth is still strong, although it is decreasing when compared to the stronger growth in the past 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
The Price/Earnings ratio is 13.63, which indicates a correct valuation of ERIC.
74.07% of the companies in the same industry are more expensive than ERIC, based on the Price/Earnings ratio.
Compared to an average S&P500 Price/Earnings ratio of 24.92, ERIC is valued a bit cheaper.
With a Price/Forward Earnings ratio of 9.47, the valuation of ERIC can be described as very reasonable.
Based on the Price/Forward Earnings ratio, ERIC is valued cheaper than 85.19% of the companies in the same industry.
ERIC is valuated cheaply when we compare the Price/Forward Earnings ratio to 21.49, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 13.63 | ||
| Fwd PE | 9.47 |
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 85.19% of the companies listed in the same industry.
79.63% 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 | 14.07 | ||
| EV/EBITDA | 6.38 |
4.3 Compensation for Growth
ERIC's PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
A more expensive valuation may be justified as ERIC's earnings are expected to grow with 15.73% in the coming years.
PEG (NY)1.18
PEG (5Y)0.28
EPS Next 2Y17.23%
EPS Next 3Y15.73%
5. Dividend
5.1 Amount
ERIC has a Yearly Dividend Yield of 4.66%, which is a nice return.
ERIC's Dividend Yield is rather good when compared to the industry average which is at 17.04. ERIC pays more dividend than 94.44% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.43, ERIC pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 4.66% |
5.2 History
On average, the dividend of ERIC grows each year by 21.64%, which is quite nice.
ERIC has paid a dividend for at least 10 years, which is a reliable track record.
ERIC has not decreased its dividend in the last 3 years.
Dividend Growth(5Y)21.64%
Div Incr Years4
Div Non Decr Years4
5.3 Sustainability
The earnings of ERIC are negative and hence is the payout ratio. ERIC will probably not be able to sustain this dividend level.
ERIC's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP-35.84%
EPS Next 2Y17.23%
EPS Next 3Y15.73%
ERICSSON (LM) TEL-SP ADR
NASDAQ:ERIC (4/26/2024, 7:00:02 PM)
After market: 5.22 +0.04 (+0.77%)5.18
-0.06 (-1.15%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupTechnology Hardware & Equipment
GICS IndustryCommunications Equipment
Earnings (Last)
Earnings (Next)
Inst Owners
Inst Owner Change
Ins Owners
Ins Owner Change
Market Cap17.26B
Analysts
Price Target
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 4.66% |
Dividend Growth(5Y)
DP
Div Incr Years
Div Non Decr Years
Ex-Date
Surprises & Revisions
EPS beat(2)
Avg EPS beat(2)
Min EPS beat(2)
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EPS beat(8)
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Revenue beat(2)
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Revenue beat(8)
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Revenue beat(16)
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PT rev (1m)
PT rev (3m)
EPS NQ rev (1m)
EPS NQ rev (3m)
EPS NY rev (1m)
EPS NY rev (3m)
Revenue NQ rev (1m)
Revenue NQ rev (3m)
Revenue NY rev (1m)
Revenue NY rev (3m)
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 13.63 | ||
| Fwd PE | 9.47 | ||
| P/S | |||
| P/FCF | |||
| P/OCF | |||
| P/B | |||
| P/tB | |||
| EV/EBITDA |
EPS(TTM)
EY
EPS(NY)
Fwd EY
FCF(TTM)
FCFY
OCF(TTM)
OCFY
SpS
BVpS
TBVpS
PEG (NY)1.18
PEG (5Y)0.28
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | -8.48% | ||
| ROE | -23.28% | ||
| ROCE | |||
| ROIC | |||
| ROICexc | |||
| ROICexgc | |||
| OM | 7.1% | ||
| PM (TTM) | N/A | ||
| GM | 40.24% | ||
| FCFM |
ROA(3y)
ROA(5y)
ROE(3y)
ROE(5y)
ROIC(3y)
ROIC(5y)
ROICexc(3y)
ROICexc(5y)
ROICexgc(3y)
ROICexgc(5y)
ROCE(3y)
ROCE(5y)
ROICexcg growth 3Y
ROICexcg growth 5Y
ROICexc growth 3Y
ROICexc growth 5Y
OM growth 3Y
OM growth 5Y
PM growth 3Y
PM growth 5Y
GM growth 3Y
GM growth 5Y
F-Score
Asset Turnover0.85
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.35 | ||
| Debt/FCF | |||
| Debt/EBITDA | |||
| Cap/Depr | |||
| Cap/Sales | |||
| Interest Coverage | |||
| Cash Conversion | |||
| Profit Quality | |||
| Current Ratio | 1.22 | ||
| Quick Ratio | 0.94 | ||
| Altman-Z |
F-Score
WACC
ROIC/WACC
Cap/Depr(3y)
Cap/Depr(5y)
Cap/Sales(3y)
Cap/Sales(5y)
Profit Quality(3y)
Profit Quality(5y)
Growth
EPS 1Y (TTM)-34.25%
EPS 3Y-9.51%
EPS 5Y
EPS growth Q2Q
EPS Next Y11.59%
EPS Next 2Y
EPS Next 3Y
EPS Next 5Y
Revenue 1Y (TTM)-8.93%
Revenue growth 3Y4.26%
Revenue growth 5Y
Revenue growth Q2Q
Revenue Next Year
Revenue Next 2Y
Revenue Next 3Y
Revenue Next 5Y
EBIT growth 1Y
EBIT growth 3Y
EBIT growth 5Y
EBIT Next Year
EBIT Next 3Y
EBIT Next 5Y
FCF growth 1Y
FCF growth 3Y
FCF growth 5Y
OCF growth 1Y
OCF growth 3Y
OCF growth 5Y