OM:ERIC B

Stock Analysis Report

Telefonaktiebolaget LM Ericsson

Executive Summary

Telefonaktiebolaget LM Ericsson (publ) provides information and communications technology solutions for service providers.

Rewards

Trading at 59.7% below its fair value

Earnings are forecast to grow 47.76% per year

Risk Analysis

No risks detected for ERIC B from our risk checks.


Snowflake Analysis

Adequate balance sheet with moderate growth potential.


Similar Companies

Share Price & News

How has Telefonaktiebolaget LM Ericsson's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: ERIC B has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

4.0%

ERIC B

4.0%

SE Communications

2.1%

SE Market


1 Year Return

10.8%

ERIC B

11.3%

SE Communications

24.5%

SE Market

Return vs Industry: ERIC B matched the Swedish Communications industry which returned 11.3% over the past year.

Return vs Market: ERIC B underperformed the Swedish Market which returned 26.1% over the past year.


Shareholder returns

ERIC BIndustryMarket
7 Day4.0%4.0%2.1%
30 Day3.3%3.4%2.7%
90 Day-2.6%-1.8%8.6%
1 Year12.2%10.8%12.6%11.3%29.7%24.5%
3 Year70.7%62.7%67.4%59.6%40.8%19.2%
5 Year-5.6%-16.6%-3.4%-14.5%58.0%24.1%

Price Volatility Vs. Market

How volatile is Telefonaktiebolaget LM Ericsson's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Telefonaktiebolaget LM Ericsson undervalued compared to its fair value and its price relative to the market?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: ERIC B (SEK82.6) is trading below our estimate of fair value (SEK205.02)

Significantly Below Fair Value: ERIC B is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: ERIC B is unprofitable, so we can't compare its PE Ratio to the Communications industry average.

PE vs Market: ERIC B is unprofitable, so we can't compare its PE Ratio to the Swedish market.


Price to Earnings Growth Ratio

PEG Ratio: Insufficient data to calculate ERIC B's PEG Ratio to determine if it is good value.


Price to Book Ratio

PB vs Industry: ERIC B is overvalued based on its PB Ratio (3.5x) compared to the SE Communications industry average (1.8x).


Next Steps

Future Growth

How is Telefonaktiebolaget LM Ericsson forecast to perform in the next 1 to 3 years based on estimates from 23 analysts?

46.7%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: ERIC B is forecast to become profitable over the next 3 years, which is considered faster growth than the savings rate (-0.4%).

Earnings vs Market: ERIC B is forecast to become profitable over the next 3 years, which is considered above average market growth.

High Growth Earnings: ERIC B's is expected to become profitable in the next 3 years.

Revenue vs Market: ERIC B's revenue (3% per year) is forecast to grow slower than the Swedish market (4.4% per year).

High Growth Revenue: ERIC B's revenue (3% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: ERIC B's Return on Equity is forecast to be low in 3 years time (19.7%).


Next Steps

Past Performance

How has Telefonaktiebolaget LM Ericsson performed over the past 5 years?

-52.4%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: ERIC B is currently unprofitable.

Growing Profit Margin: ERIC B is currently unprofitable.


Past Earnings Growth Analysis

Earnings Trend: ERIC B is unprofitable, and losses have increased over the past 5 years at a rate of -52.4% per year.

Accelerating Growth: Unable to compare ERIC B's earnings growth over the past year to its 5-year average as it is currently unprofitable

Earnings vs Industry: ERIC B is unprofitable, making it difficult to compare its past year earnings growth to the Communications industry (49.1%).


Return on Equity

High ROE: ERIC B has a negative Return on Equity (-11.8%), as it is currently unprofitable.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Telefonaktiebolaget LM Ericsson's financial position?


Financial Position Analysis

Short Term Liabilities: ERIC B's short term assets (SEK165.6B) exceed its short term liabilities (SEK123.3B).

Long Term Liabilities: ERIC B's short term assets (SEK165.6B) exceed its long term liabilities (SEK87.7B).


Debt to Equity History and Analysis

Debt Level: ERIC B's debt to equity ratio (50%) is considered high.

Reducing Debt: ERIC B's debt to equity ratio has increased from 15.8% to 50% over the past 5 years.


Balance Sheet

Inventory Level: ERIC B has a high level of physical assets or inventory.

Debt Coverage by Assets: ERIC B's debt is covered by short term assets (assets are 4.3x debt).


Cash Runway Analysis

For companies that have on average been loss making in the past we assess whether they have at least 1 year of cash runway.

Stable Cash Runway: Whilst unprofitable ERIC B has sufficient cash runway for more than 3 years if it maintains its current positive free cash flow level.

Forecast Cash Runway: ERIC B is unprofitable but has sufficient cash runway for more than 3 years, due to free cash flow being positive and growing by 25.6% per year.


Next Steps

Dividend

What is Telefonaktiebolaget LM Ericsson's current dividend yield, its reliability and sustainability?

1.17%

Current Dividend Yield


Dividend Yield vs Market

company1.2%marketbottom25%1.6%markettop25%4.4%industryaverage3.0%forecastin3Years2.6%

Current dividend yield vs market & industry

Notable Dividend: ERIC B's dividend (1.21%) isn’t notable compared to the bottom 25% of dividend payers in the Swedish market (1.57%).

High Dividend: ERIC B's dividend (1.21%) is low compared to the top 25% of dividend payers in the Swedish market (4.45%).


Stability and Growth of Payments

Stable Dividend: ERIC B's dividend payments have been volatile in the past 10 years.

Growing Dividend: ERIC B's dividend payments have fallen over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: ERIC B is paying a dividend but the company is unprofitable.


Future Payout to Shareholders

Future Dividend Coverage: ERIC B's dividends in 3 years are forecast to be well covered by earnings (45% payout ratio).


Next Steps

Management

What is the CEO of Telefonaktiebolaget LM Ericsson's salary, the management and board of directors tenure and is there insider trading?

2.8yrs

Average management tenure


CEO

E. Ekholm (56yo)

3yrs

Tenure

kr737,547

Compensation

Mr. E. Börje Ekholm, MSc, MBA serves as Independent Director of Trimble Inc. since January 04, 2020. He has been the Chief Executive Officer and President of Telefonaktiebolaget LM Ericsson (publ) since Ja ...


CEO Compensation Analysis

Compensation vs Market: E.'s total compensation ($USD77.94K) is below average for companies of similar size in the Swedish market ($USD2.04M).

Compensation vs Earnings: E.'s compensation has been consistent with company performance over the past year.


Management Age and Tenure

2.8yrs

Average Tenure

55yo

Average Age

Experienced Management: ERIC B's management team is considered experienced (2.8 years average tenure).


Board Age and Tenure

2.8yrs

Average Tenure

58.5yo

Average Age

Experienced Board: ERIC B's board of directors are not considered experienced ( 2.8 years average tenure), which suggests a new board.


Insider Trading

Insider Buying: ERIC B insiders have only sold shares in the past 3 months.


Recent Insider Transactions

Sellkr35,32019 Nov 19
Peter Laurin
EntityIndividual
Shares402.29
Max Pricekr87.80
Sellkr27,81519 Nov 19
MajBritt Arfert
EntityIndividual
Role
Head of Human Resources
Senior VP
Shares316.8
Max Pricekr87.80
Sellkr95,58319 Nov 19
Carl Mellander
EntityIndividual
Role
Chief Financial Officer
Senior VP
Shares1,088.66
Max Pricekr87.80
Sellkr78,98419 Nov 19
Nunzio Mirtillo
EntityIndividual
Shares899.61
Max Pricekr87.80
Sellkr99,33819 Nov 19
Chris Houghton
EntityIndividual
Shares1,131.43
Max Pricekr87.80
Sellkr56,67719 Nov 19
Arun Bansal
EntityIndividual
Shares645.54
Max Pricekr87.80
Sellkr99,33819 Nov 19
Niklas Heuveldop
EntityIndividual
Shares1,131.43
Max Pricekr87.80
Sellkr397,88323 Oct 19
Peter Laurin
EntityIndividual
Shares4,494.84
Max Pricekr88.52
Sellkr28,04220 Aug 19
Fredrik Jejdling
EntityIndividual
Shares345.4
Max Pricekr81.19
Sellkr50,78920 Aug 19
Peter Laurin
EntityIndividual
Shares625.57
Max Pricekr81.19
Sellkr19,16620 Aug 19
MajBritt Arfert
EntityIndividual
Role
Head of Human Resources
Senior VP
Shares236.07
Max Pricekr81.19
Sellkr52,85720 Aug 19
Nunzio Mirtillo
EntityIndividual
Shares651.03
Max Pricekr81.19
Sellkr38,07020 Aug 19
Arun Bansal
EntityIndividual
Shares468.91
Max Pricekr81.19
Sellkr65,86420 Aug 19
Carl Mellander
EntityIndividual
Role
Chief Financial Officer
Senior VP
Shares811.25
Max Pricekr81.19
Sellkr68,45120 Aug 19
Chris Houghton
EntityIndividual
Shares843.12
Max Pricekr81.19
Sellkr56,45120 May 19
MajBritt Arfert
EntityIndividual
Role
Head of Human Resources
Senior VP
Shares635.14
Max Pricekr88.88
Sellkr83,58220 May 19
Peter Laurin
EntityIndividual
Shares940.39
Max Pricekr88.88
Sellkr45,07820 May 19
Fredrik Jejdling
EntityIndividual
Shares507.18
Max Pricekr88.88
Sellkr40,52020 May 19
Arun Bansal
EntityIndividual
Shares455.89
Max Pricekr88.88
Sellkr69,28920 May 19
Helena Norrman
EntityIndividual
Shares779.58
Max Pricekr88.88
Sellkr74,23820 May 19
Chris Houghton
EntityIndividual
Shares835.26
Max Pricekr88.88
Sellkr56,45120 May 19
Nunzio Mirtillo
EntityIndividual
Shares635.14
Max Pricekr88.88
Sellkr71,43220 May 19
Carl Mellander
EntityIndividual
Role
Chief Financial Officer
Senior VP
Shares803.69
Max Pricekr88.88
Sellkr320,726,63630 Apr 19
Cevian Capital AB
EntityCompany
Shares3,371,442
Max Pricekr95.43
Buykr37,39025 Apr 19
Helena Norrman
EntityIndividual
Shares395.72
Max Pricekr94.49
Buykr30,00325 Apr 19
Nunzio Mirtillo
EntityIndividual
Shares317.53
Max Pricekr94.49
Buykr27,52525 Apr 19
Chris Houghton
EntityIndividual
Shares291.32
Max Pricekr94.49
Buykr11,78025 Apr 19
Arun Bansal
EntityIndividual
Shares124.67
Max Pricekr94.49
Buykr3,02625 Apr 19
Niklas Heuveldop
EntityIndividual
Shares32.02
Max Pricekr94.49
Buykr4,55825 Apr 19
Lars-Peter Laurin
EntityIndividual
Shares48.24
Max Pricekr94.49
Buykr1,88925 Apr 19
Anders Ripa
EntityIndividual
Shares20
Max Pricekr94.49
Buykr30,36025 Apr 19
Carl Mellander
EntityIndividual
Role
Chief Financial Officer
Senior VP
Shares321.32
Max Pricekr94.49
Buykr1,84125 Apr 19
Rafiah Ibrahim
EntityIndividual
Shares19.49
Max Pricekr94.49
Buykr19,59525 Apr 19
Torbjorn Nyman
EntityIndividual
Role
Member of the Board of Directors
Employee Representative Director
Shares207.39
Max Pricekr94.49
Buykr13,00325 Apr 19
Roger Svensson
EntityIndividual
Role
Member of the Board of Directors
Employee Representative Director
Shares137.62
Max Pricekr94.49
Buykr3,94825 Apr 19
Kjell-Åke Soting
EntityIndividual
Shares41.79
Max Pricekr94.49
Buykr1,60225 Apr 19
Loredana Roslund
EntityIndividual
Shares16.96
Max Pricekr94.49
Buykr21,57625 Apr 19
MajBritt Arfert
EntityIndividual
Role
Head of Human Resources
Senior VP
Shares228.35
Max Pricekr94.49
Buykr13,49325 Apr 19
Fredrik Jejdling
EntityIndividual
Shares142.81
Max Pricekr94.49
Sellkr55,45219 Feb 19
Helena Norrman
EntityIndividual
Shares643.47
Max Pricekr86.18
Sellkr45,16119 Feb 19
Nunzio Mirtillo
EntityIndividual
Shares524.05
Max Pricekr86.18
Sellkr57,16719 Feb 19
Carl Mellander
EntityIndividual
Role
Chief Financial Officer
Senior VP
Shares663.37
Max Pricekr86.18
Sellkr59,41319 Feb 19
Chris Houghton
EntityIndividual
Shares689.43
Max Pricekr86.18
Sellkr33,07319 Feb 19
Arun Bansal
EntityIndividual
Shares383.78
Max Pricekr86.18
Sellkr36,18419 Feb 19
Fredrik Jejdling
EntityIndividual
Shares419.88
Max Pricekr86.18
Sellkr71,38019 Feb 19
Peter Laurin
EntityIndividual
Shares828.3
Max Pricekr86.18
Sellkr16,63619 Feb 19
MajBritt Arfert
EntityIndividual
Role
Head of Human Resources
Senior VP
Shares193.04
Max Pricekr86.18
Sellkr118,13731 Jan 19
Peter Laurin
EntityIndividual
Shares1,464.92
Max Pricekr80.64

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Management Team

  • E. Ekholm (56yo)

    President

    • Tenure: 3yrs
    • Compensation: kr737.55k
  • Björn Boström (72yo)

    Senior Vice President of Supply & Information Technology

    • Ola Rembe

      VP & Head of External Communications

      • Peter Nyquist (54yo)

        VP & Head of Investor Relations

        • Tenure: 6.3yrs
      • Stella Medlicott (50yo)

        SVP, Chief Marketing & Communications Officer and Head of Group Marketing & Corporate Relations

        • Tenure: 0.6yrs
      • Eva-Britt Allenius

        Chief Accounting Officer

        • Xavier Dedullen (55yo)

          Senior VP

          • Tenure: 1.8yrs
        • Carl Mellander (55yo)

          Senior VP

          • Tenure: 2.8yrs
        • MajBritt Arfert (56yo)

          Senior VP

          • Tenure: 3.2yrs
        • Erik Ekudden (51yo)

          Group CTO

          • Tenure: 2.5yrs

        Board Members

        • E. Ekholm (56yo)

          President

          • Tenure: 3yrs
          • Compensation: kr737.55k
        • Nora Denzel (57yo)

          Independent Director

          • Tenure: 6.8yrs
          • Compensation: kr1.69m
        • Kurt Jofs (61yo)

          Independent Director

          • Tenure: 1.8yrs
          • Compensation: kr1.48m
        • Helena Stjernholm (49yo)

          Deputy Chairman

          • Tenure: 3.8yrs
          • Compensation: kr1.66m
        • Jacob Wallenberg (63yo)

          Deputy Chairman

          • Compensation: kr1.91m
        • Jon Baksaas (65yo)

          Independent Director

          • Tenure: 2.8yrs
          • Compensation: kr1.50m
        • Torbjorn Nyman (58yo)

          Employee Representative Director

          • Tenure: 1.8yrs
          • Compensation: kr31.50k
        • Ronnie Leten (63yo)

          Chairman of the Board

          • Tenure: 1.8yrs
          • Compensation: kr4.83m
        • Roger Svensson (48yo)

          Employee Representative Director

          • Tenure: 2.8yrs
          • Compensation: kr48.00k
        • Eric Elzvik (59yo)

          Independent Director

          • Tenure: 2.8yrs
          • Compensation: kr1.44m

        Company Information

        Telefonaktiebolaget LM Ericsson (publ)'s company bio, employee growth, exchange listings and data sources


        Key Information

        • Name: Telefonaktiebolaget LM Ericsson (publ)
        • Ticker: ERIC B
        • Exchange: OM
        • Founded: 1876
        • Industry: Communications Equipment
        • Sector: Tech
        • Market Cap: kr283.914b
        • Shares outstanding: 3.31b
        • Website: https://www.ericsson.com

        Number of Employees


        Location

        • Telefonaktiebolaget LM Ericsson (publ)
        • Torshamnsgatan 21
        • Kista
        • Stockholm
        • Stockholm County
        • 164 83
        • Sweden

        Listings

        TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
        ERCADB (Deutsche Boerse AG)ADR EACH REP 1 ORD'B'SEK1DEEURDec 1972
        ERICNasdaqGS (Nasdaq Global Select)ADR EACH REP 1 ORD'B'SEK1USUSDDec 1972
        ERCAXTRA (XETRA Trading Platform)ADR EACH REP 1 ORD'B'SEK1DEEURDec 1972
        ERIC NBMV (Bolsa Mexicana de Valores)ADR EACH REP 1 ORD'B'SEK1MXMXNDec 1972
        ERCBDB (Deutsche Boerse AG)YesClass B SharesDEEURSep 1990
        ERCBETLX (Eurotlx)YesClass B SharesITEURSep 1990
        ERIBRHLSE (OMX Nordic Exchange Helsinki)YesClass B SharesFIEURSep 1990
        ERIC BOM (OMX Nordic Exchange Stockholm)YesClass B SharesSESEKSep 1990
        ERICBSWX (SIX Swiss Exchange)YesClass B SharesCHCHFSep 1990
        ERIX.FOTCPK (Pink Sheets LLC)YesClass B SharesUSUSDSep 1990
        ERCBXTRA (XETRA Trading Platform)YesClass B SharesDEEURSep 1990
        0O87LSE (London Stock Exchange)YesClass B SharesGBSEKSep 1990
        ERIBRHBATS-CHIXE (BATS 'Chi-X Europe')YesClass B SharesGBEURSep 1990
        ERICBSBATS-CHIXE (BATS 'Chi-X Europe')YesClass B SharesGBSEKSep 1990
        ERCGDB (Deutsche Boerse AG)Class A SharesDEEURJan 1992
        0O86LSE (London Stock Exchange)Class A SharesGBSEKJan 1992
        ERICASBATS-CHIXE (BATS 'Chi-X Europe')Class A SharesGBSEKJan 1992
        ERIC AOM (OMX Nordic Exchange Stockholm)Class A SharesSESEKJan 1992
        ERCGXTRA (XETRA Trading Platform)Class A SharesDEEURJan 1992

        Biography

        Telefonaktiebolaget LM Ericsson (publ) provides information and communications technology solutions for service providers. It operates through four segments: Networks, Digital Services, Managed Services, and Emerging Business and Other. The Networks segment provides mobile radio access networks, transport solutions, and site solutions, as well as related services, such as network rollout, network tuning, and customer support. The Digital Services segment offers products and services for service providers in the areas of business support systems, operations support systems, cloud core, cloud communication, network functions virtualization, and cloud infrastructure, as well as consulting, learning, and testing services. The Managed Services segment provides vendor agnostic services, including networks and IT managed, application development and modernization, and network design and optimization services to manage service providers networks. The Emerging Business and Other segment consists of emerging businesses; iconectiv that offers software-based interconnection solutions; media solutions; and Red Bee Media, which consists of technology enabled services to manage the play-out platform for broadcasters and content owners. It operates in Europe and Latin America, the Middle East and Africa, North America, North East Asia, South East Asia, Oceania, and India. The company was founded in 1876 and is headquartered in Stockholm, Sweden. 


        Company Analysis and Financial Data Status

        All financial data provided by Standard & Poor's Capital IQ.
        DataLast Updated (UTC time)
        Company Analysis2020/01/19 20:40
        End of Day Share Price2020/01/17 00:00
        Earnings2019/09/30
        Annual Earnings2018/12/31


        Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.