OM:ERIC B

Stock Analysis Report

Telefonaktiebolaget LM Ericsson

Executive Summary

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


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

6.3%

ERIC B

6.2%

SE Communications

0.3%

SE Market


1 Year Return

-12.0%

ERIC B

-12.7%

SE Communications

-13.2%

SE Market

Return vs Industry: ERIC B underperformed the Swedish Communications industry which returned -9.2% over the past year.

Return vs Market: ERIC B underperformed the Swedish Market which returned -8.2% over the past year.


Shareholder returns

ERIC BIndustryMarket
7 Day6.3%6.2%0.3%
30 Day4.6%4.0%-19.3%
90 Day-5.0%-6.0%-23.1%
1 Year-11.2%-12.0%-11.9%-12.7%-11.0%-13.2%
3 Year38.2%32.8%35.5%30.2%-0.2%-14.7%
5 Year-21.1%-30.9%-20.1%-30.0%6.0%-16.1%

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?

23.3%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: ERIC B (SEK78.88) is trading below our estimate of fair value (SEK108.77)

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 poor value based on its PE Ratio (117.3x) compared to the Communications industry average (27.8x).

PE vs Market: ERIC B is poor value based on its PE Ratio (117.3x) compared to the Swedish market (14.9x).


Price to Earnings Growth Ratio

PEG Ratio: ERIC B is poor value based on its PEG Ratio (3.9x)


Price to Book Ratio

PB vs Industry: ERIC B is overvalued based on its PB Ratio (3.2x) compared to the SE Communications industry average (1.1x).


Next Steps

Future Growth

How is Telefonaktiebolaget LM Ericsson forecast to perform in the next 1 to 3 years based on estimates from 25 analysts?

29.9%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: ERIC B's forecast earnings growth (29.9% per year) is above the savings rate (-0.4%).

Earnings vs Market: ERIC B's earnings (29.9% per year) are forecast to grow faster than the Swedish market (7.9% per year).

High Growth Earnings: earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: ERIC B's revenue (3.2% per year) is forecast to grow slower than the Swedish market (4.1% per year).

High Growth Revenue: ERIC B's revenue (3.2% 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 (18.8%).


Next Steps

Past Performance

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

-45.4%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: ERIC B has a large one-off loss of SEK11.6B impacting its December 31 2019 financial results.

Growing Profit Margin: ERIC B became profitable in the past.


Past Earnings Growth Analysis

Earnings Trend: ERIC B has become profitable over the past 5 years, growing earnings by -45.4% per year.

Accelerating Growth: ERIC B has become profitable in the last year, making the earnings growth rate difficult to compare to its 5-year average.

Earnings vs Industry: ERIC B has become profitable in the last year, making it difficult to compare its past year earnings growth to the Communications industry (21.9%).


Return on Equity

High ROE: ERIC B's Return on Equity (2.2%) is considered low.


Next Steps

Financial Health

How is Telefonaktiebolaget LM Ericsson's financial position?


Financial Position Analysis

Short Term Liabilities: ERIC B's short term assets (SEK153.9B) exceed its short term liabilities (SEK116.8B).

Long Term Liabilities: ERIC B's short term assets (SEK153.9B) exceed its long term liabilities (SEK77.7B).


Debt to Equity History and Analysis

Debt Level: ERIC B's debt to equity ratio (46.2%) is considered high.

Reducing Debt: ERIC B's debt to equity ratio has increased from 18% to 46.2% over the past 5 years.


Balance Sheet

Inventory Level: ERIC B has a low level of unsold assets or inventory.

Debt Coverage by Assets: ERIC B's debt is covered by short term assets (assets are 4.1x 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: ERIC B is profitable, therefore cash runway is not a concern.

Forecast Cash Runway: ERIC B is profitable, therefore cash runway is not a concern.


Next Steps

Dividend

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

1.91%

Current Dividend Yield


Upcoming Dividend Payment


Dividend Yield vs Market

Notable Dividend: ERIC B's dividend (1.9%) isn’t notable compared to the bottom 25% of dividend payers in the Swedish market (1.99%).

High Dividend: ERIC B's dividend (1.9%) is low compared to the top 25% of dividend payers in the Swedish market (6.15%).


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: With its high payout ratio (223.1%), ERIC B's dividend payments are not well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: ERIC B's dividends in 3 years are forecast to be well covered by earnings (43.9% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

3.0yrs

Average management tenure


CEO

E. Ekholm (56yo)

3.25s

Tenure

kr133,212

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 ($USD13.30K) is below average for companies of similar size in the Swedish market ($USD1.78M).

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


Leadership Team

NamePositionTenureCompensationOwnership
E. Ekholm
President3.25yrskr133.21k0.031% SEK86.5m
Carl Mellander
Senior VP3yrsno data0.00094% SEK2.6m
Eva-Britt Allenius
Chief Accounting Officerno datano datano data
Erik Ekudden
Group CTO2.75yrsno datano data
Peter Nyquist
VP & Head of Investor Relations6.58yrsno datano data
Xavier Dedullen
Senior VP2yrsno datano data
Stella Medlicott
SVP, Chief Marketing & Communications Officer and Head of Group Function Mktg. & Corporate Relations0.83yrno datano data
MajBritt Arfert
Senior VP3.42yrsno data0.00063% SEK1.8m
Björn Boström
Senior Vice President of Supply & Information Technologyno datano datano data
Ola Rembe
VP & Head of External Communicationsno datano datano data

3.0yrs

Average Tenure

55yo

Average Age

Experienced Management: ERIC B's management team is considered experienced (3 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
E. Ekholm
President3.25yrskr133.21k0.031% SEK86.5m
Nora Denzel
Independent Director7yrskr1.38m0.00012% SEK333.6k
Kurt Jofs
Independent Director2.08yrskr1.13m0.0015% SEK4.2m
Helena Stjernholm
Deputy Independent Chairman4yrskr1.09m0.00061% SEK1.7m
Jacob Wallenberg
Deputy Independent Chairmanno datakr1.03m0.013% SEK35.9m
Jon Baksaas
Independent Director3.08yrskr958.79kno data
Torbjorn Nyman
Employee Representative Director2.08yrskr40.50k0.00095% SEK2.6m
Ronnie Leten
Independent Chairman of the Board2.08yrskr3.80m0.0030% SEK8.4m
Roger Svensson
Employee Representative Director3.08yrskr36.00k0.00060% SEK1.7m
Eric Elzvik
Independent Director3.08yrskr1.33m0.00030% SEK834.0k

3.1yrs

Average Tenure

58.5yo

Average Age

Experienced Board: ERIC B's board of directors are considered experienced (3.1 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

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


Recent Insider Transactions

Ownership Breakdown

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


Top Shareholders

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: kr277.992b
  • Shares outstanding: 3.54b
  • 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
ERICNasdaqGS (Nasdaq Global Select)ADR EACH REP 1 ORD'B'SEK1USUSDDec 1972
ERIC NBMV (Bolsa Mexicana de Valores)ADR EACH REP 1 ORD'B'SEK1MXMXNDec 1972
ERCADB (Deutsche Boerse AG)ADR EACH REP 1 ORD'B'SEK1DEEURDec 1972
ERCAXTRA (XETRA Trading Platform)ADR EACH REP 1 ORD'B'SEK1DEEURDec 1972
ERIX.FOTCPK (Pink Sheets LLC)YesClass B SharesUSUSDSep 1990
ERIC BOM (OMX Nordic Exchange Stockholm)YesClass B SharesSESEKSep 1990
ERCBDB (Deutsche Boerse AG)YesClass B SharesDEEURSep 1990
0O87LSE (London Stock Exchange)YesClass B SharesGBSEKSep 1990
ERIBRHLSE (OMX Nordic Exchange Helsinki)YesClass B SharesFIEURSep 1990
ERICBSWX (SIX Swiss Exchange)YesClass B SharesCHCHFSep 1990
ERCBXTRA (XETRA Trading Platform)YesClass B SharesDEEURSep 1990
ERICBSBATS-CHIXE (BATS 'Chi-X Europe')YesClass B SharesGBSEKSep 1990
ERIBRHBATS-CHIXE (BATS 'Chi-X Europe')YesClass B SharesGBEURSep 1990
ERCBETLX (Eurotlx)YesClass B SharesITEURSep 1990
ERIC AOM (OMX Nordic Exchange Stockholm)Class A SharesSESEKJan 1992
ERCGXTRA (XETRA Trading Platform)Class A SharesDEEURJan 1992
0O86LSE (London Stock Exchange)Class A SharesGBSEKJan 1992
ERCGDB (Deutsche Boerse AG)Class A SharesDEEURJan 1992
ERICASBATS-CHIXE (BATS 'Chi-X Europe')Class A SharesGBSEKJan 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 hardware, software, and related services for radio access and transport, as well as related services, such as design, tuning, network rollout, and customer support. The Digital Services segment offers products and services for operators 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 networks and IT managed, network design and optimization, and application development and maintenance services to operators. The Emerging Business and Other segment consists of emerging businesses; iconectiv that offers software-based interconnection 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 North America, Europe and Latin America, the Middle East and Africa, South East Asia, Oceania, India, North East Asia, and internationally. 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 Analysis2020/04/04 00:46
End of Day Share Price2020/04/03 00:00
Earnings2019/12/31
Annual Earnings2019/12/31


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.