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ERIC

Telefonaktiebolaget LM Ericsson NasdaqGS:ERIC Stock Report

Last Price

kr7.37

Market Cap

kr24.4b

7D

-5.3%

1Y

-43.0%

Updated

05 Jul, 2022

Data

Company Financials +
ERIC fundamental analysis
Snowflake Score
Valuation5/6
Future Growth1/6
Past Performance4/6
Financial Health5/6
Dividends3/6

ERIC Stock Overview

Telefonaktiebolaget LM Ericsson (publ), together with its subsidiaries, provides communication infrastructure, services, and software solutions to the telecom and other sectors.

Telefonaktiebolaget LM Ericsson Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Telefonaktiebolaget LM Ericsson
Historical stock prices
Current Share Pricekr7.37
52 Week Highkr13.40
52 Week Lowkr7.23
Beta0.14
1 Month Change-10.23%
3 Month Change-22.01%
1 Year Change-43.05%
3 Year Change-21.93%
5 Year Change0.27%
Change since IPO63.35%

Recent News & Updates

May 16

Ericsson: Hold As It Faces Uncertain Future

Telefonaktiebolaget LM Ericsson is amongst the leading communications infrastructure companies in the world that is a major player in the upcoming IoT and 5G domains. The company saw a share plummet this year, after confirmation of its involvement in corrupt practices, which included secret dealings with the terror group, ISIS. ERIC’s financial performance had taken a substantial hit as a result of disruptions caused by Russia’s invasion of Ukraine, and the subsequent economic implications of sanctions. In comparison to its peers, certain valuation metrics hint at an undervaluation, whilst others emphasize they are better investment options within the industry.

Feb 26

Ericsson: A Swedish Telco Major With Risk As Well As Upside

Ericsson is probably the company that most investors have wanted me to look at for the longest amount of time. I haven't - until now. There are very specific reasons why I'm hesitant to invest in native Ericsson and why my investments in the company are "indirect." However, following recent trends, there's an upside. And you SHOULD know Ericsson. So, I'm going to teach you about Ericsson and tell you what you need to know.

Shareholder Returns

ERICUS CommunicationsUS Market
7D-5.3%-2.0%0.3%
1Y-43.0%-18.7%-18.4%

Return vs Industry: ERIC underperformed the US Communications industry which returned -18.5% over the past year.

Return vs Market: ERIC underperformed the US Market which returned -19.1% over the past year.

Price Volatility

Is ERIC's price volatile compared to industry and market?
ERIC volatility
ERIC Average Weekly Movement5.6%
Communications Industry Average Movement8.3%
Market Average Movement8.1%
10% most volatile stocks in US Market16.8%
10% least volatile stocks in US Market3.3%

Stable Share Price: ERIC is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 6% a week.

Volatility Over Time: ERIC's weekly volatility (6%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
1876101,067E. Ekholmhttps://www.ericsson.com

Telefonaktiebolaget LM Ericsson (publ), together with its subsidiaries, provides communication infrastructure, services, and software solutions to the telecom and other sectors. It operates through four segments: Networks, Digital Services, Managed Services, and Emerging Business and Other. The Networks segment offers radio access network solutions for various network spectrum bands, including integrated high-performing hardware and software.

Telefonaktiebolaget LM Ericsson Fundamentals Summary

How do Telefonaktiebolaget LM Ericsson's earnings and revenue compare to its market cap?
ERIC fundamental statistics
Market Capkr257.42b
Earnings (TTM)kr22.45b
Revenue (TTM)kr237.60b

11.4x

P/E Ratio

1.1x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
ERIC income statement (TTM)
Revenuekr237.60b
Cost of Revenuekr134.64b
Gross Profitkr102.96b
Other Expenseskr80.51b
Earningskr22.45b

Last Reported Earnings

Mar 31, 2022

Next Earnings Date

Jul 14, 2022

Earnings per share (EPS)6.74
Gross Margin43.33%
Net Profit Margin9.45%
Debt/Equity Ratio35.5%

How did ERIC perform over the long term?

See historical performance and comparison

Dividends

3.3%

Current Dividend Yield

37%

Payout Ratio
We’ve recently updated our valuation analysis.

Valuation

Is ERIC undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

5/6

Valuation Score 5/6

  • Price-To-Earnings vs Peers

  • Price-To-Earnings vs Industry

  • Price-To-Earnings vs Fair Ratio

  • Below Fair Value

  • Significantly Below Fair Value

  • PEG Ratio

Key Valuation Metric

Which metric is best to use when looking at relative valuation for ERIC?

Other financial metrics that can be useful for relative valuation.

ERIC key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue0.9x
Enterprise Value/EBITDA5.6x
PEG Ratio1.5x

Price to Earnings Ratio vs Peers

How does ERIC's PE Ratio compare to its peers?

ERIC PE Ratio vs Peers
The above table shows the PE ratio for ERIC vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyPEEstimated GrowthMarket Cap
Peer Average30.1x
ANET Arista Networks
31.8x11.1%US$29.6b
MSI Motorola Solutions
28x10.4%US$35.5b
UI Ubiquiti
33.9x8.2%US$14.9b
JNPR Juniper Networks
26.7x11.7%US$9.1b
ERIC Telefonaktiebolaget LM Ericsson
11.4x7.4%US$257.4b

Price-To-Earnings vs Peers: ERIC is good value based on its Price-To-Earnings Ratio (11.4x) compared to the peer average (30.1x).


Price to Earnings Ratio vs Industry

How does ERIC's PE Ratio compare vs other companies in the US Communications Industry?

Price-To-Earnings vs Industry: ERIC is good value based on its Price-To-Earnings Ratio (11.4x) compared to the US Communications industry average (21.8x)


Price to Earnings Ratio vs Fair Ratio

What is ERIC's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

ERIC PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio11.4x
Fair PE Ratio22.2x

Price-To-Earnings vs Fair Ratio: ERIC is good value based on its Price-To-Earnings Ratio (11.4x) compared to the estimated Fair Price-To-Earnings Ratio (22.2x).


Share Price vs Fair Value

What is the Fair Price of ERIC when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: ERIC ($7.37) is trading below our estimate of fair value ($16.46)

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


Price to Earnings Growth Ratio

PEG Ratio: ERIC is poor value based on its PEG Ratio (1.5x)


Discover undervalued companies

Future Growth

How is Telefonaktiebolaget LM Ericsson forecast to perform in the next 1 to 3 years based on estimates from 21 analysts?

Future Growth Score

1/6

Future Growth Score 1/6

  • Earnings vs Savings Rate

  • Earnings vs Market

  • High Growth Earnings

  • Revenue vs Market

  • High Growth Revenue

  • Future ROE


7.4%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: ERIC's forecast earnings growth (7.4% per year) is above the savings rate (1.9%).

Earnings vs Market: ERIC's earnings (7.4% per year) are forecast to grow slower than the US market (12.8% per year).

High Growth Earnings: ERIC's earnings are forecast to grow, but not significantly.

Revenue vs Market: ERIC's revenue (2.3% per year) is forecast to grow slower than the US market (7.8% per year).

High Growth Revenue: ERIC's revenue (2.3% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: ERIC's Return on Equity is forecast to be low in 3 years time (18.7%).


Discover growth companies

Past Performance

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

Past Performance Score

4/6

Past Performance Score 4/6

  • Quality Earnings

  • Growing Profit Margin

  • Earnings Trend

  • Accelerating Growth

  • Earnings vs Industry

  • High ROE


70.5%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: ERIC has high quality earnings.

Growing Profit Margin: ERIC's current net profit margins (9.4%) are higher than last year (8%).


Past Earnings Growth Analysis

Earnings Trend: ERIC has become profitable over the past 5 years, growing earnings by 70.5% per year.

Accelerating Growth: ERIC's earnings growth over the past year (21.2%) is below its 5-year average (70.5% per year).

Earnings vs Industry: ERIC earnings growth over the past year (21.2%) underperformed the Communications industry 35.7%.


Return on Equity

High ROE: ERIC's Return on Equity (20.7%) is considered high.


Discover strong past performing companies

Financial Health

How is Telefonaktiebolaget LM Ericsson's financial position?

Financial Health Score

5/6

Financial Health Score 5/6

  • Short Term Liabilities

  • Long Term Liabilities

  • Debt Level

  • Reducing Debt

  • Debt Coverage

  • Interest Coverage

Financial Position Analysis

Short Term Liabilities: ERIC's short term assets (SEK207.1B) exceed its short term liabilities (SEK141.2B).

Long Term Liabilities: ERIC's short term assets (SEK207.1B) exceed its long term liabilities (SEK72.9B).


Debt to Equity History and Analysis

Debt Level: ERIC has more cash than its total debt.

Reducing Debt: ERIC's debt to equity ratio has increased from 29.4% to 35.5% over the past 5 years.

Debt Coverage: ERIC's debt is well covered by operating cash flow (92%).

Interest Coverage: ERIC's interest payments on its debt are well covered by EBIT (36.9x coverage).


Balance Sheet


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Dividend

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

Dividend Score

3/6

Dividend Score 3/6

  • Notable Dividend

  • High Dividend

  • Stable Dividend

  • Growing Dividend

  • Earnings Coverage

  • Cash Flow Coverage


3.26%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: ERIC's dividend (3.26%) is higher than the bottom 25% of dividend payers in the US market (1.6%).

High Dividend: ERIC's dividend (3.26%) is low compared to the top 25% of dividend payers in the US market (4.24%).


Stability and Growth of Payments

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

Growing Dividend: ERIC's dividend payments have not increased over the past 10 years.


Earnings Payout to Shareholders

Earnings Coverage: With its reasonably low payout ratio (37.1%), ERIC's dividend payments are well covered by earnings.


Cash Payout to Shareholders

Cash Flow Coverage: With its reasonably low cash payout ratio (26.6%), ERIC's dividend payments are well covered by cash flows.


Discover strong dividend paying companies

Management

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

5.4yrs

Average management tenure


CEO

E. Ekholm (59 yo)

5.5yrs

Tenure

kr65,114,294

Compensation

Mr. E. Borje 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 ($USD6.18M) is below average for companies of similar size in the US market ($USD13.41M).

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


Leadership Team

Experienced Management: ERIC's management team is seasoned and experienced (5.4 years average tenure).


Board Members

Experienced Board: ERIC's board of directors are considered experienced (5.3 years average tenure).


Ownership

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


Insider Trading Volume

Insider Buying: ERIC insiders have bought more shares than they have sold 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 employee growth, exchange listings and data sources


Key Information

  • Name: Telefonaktiebolaget LM Ericsson (publ)
  • Ticker: ERIC
  • Exchange: NasdaqGS
  • Founded: 1876
  • Industry: Communications Equipment
  • Sector: Tech
  • Implied Market Cap: kr257.417b
  • Listing Market Cap: kr24.425b
  • Shares outstanding: 3.33b
  • Website: https://www.ericsson.com

Number of Employees


Location

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

Listings


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2022/07/05 00:00
End of Day Share Price2022/07/05 00:00
Earnings2022/03/31
Annual Earnings2021/12/31


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.