Telefonaktiebolaget LM Ericsson (publ)
Telefonaktiebolaget LM Ericsson (publ) Fundamental Analysis
Telefonaktiebolaget LM Ericsson (publ) (ERIC) shows moderate financial fundamentals with a PE ratio of 12.06, profit margin of 12.07%, and ROE of 28.92%. The company generates $229.9B in annual revenue with weak year-over-year growth of -5.87%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 58.5/100 based on profitability, valuation, growth, and balance sheet metrics. The C grade reflects average fundamentals, with notable risks in certain areas.
Fundamental Health Score
We analyze ERIC's fundamental strength across five key dimensions:
Efficiency Score
WeakERIC struggles to generate sufficient returns from assets.
Valuation Score
ExcellentERIC trades at attractive valuation levels.
Growth Score
WeakERIC faces weak or negative growth trends.
Financial Health Score
ExcellentERIC maintains a strong and stable balance sheet.
Profitability Score
ModerateERIC maintains healthy but balanced margins.
Key Financial Metrics
Is ERIC Expensive or Cheap?
P/E Ratio
ERIC trades at 12.06 times earnings. This suggests potential undervaluation.
PEG Ratio
When adjusting for growth, ERIC's PEG of 0.09 indicates potential undervaluation.
Price to Book
The market values Telefonaktiebolaget LM Ericsson (publ) at 3.06 times its book value. This suggests the stock is fully valued or overvalued on an asset basis.
EV/EBITDA
Enterprise value stands at 7.00 times EBITDA. This is generally considered low.
How Well Does ERIC Make Money?
Net Profit Margin
For every $100 in sales, Telefonaktiebolaget LM Ericsson (publ) keeps $12.07 as profit after all expenses.
Operating Margin
Core operations generate 13.84 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $28.92 in profit for every $100 of shareholder equity.
ROA
Telefonaktiebolaget LM Ericsson (publ) generates $9.94 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
Telefonaktiebolaget LM Ericsson (publ) produces operating cash flow of $31.60B, showing steady but balanced cash generation.
Free Cash Flow
Telefonaktiebolaget LM Ericsson (publ) generates strong free cash flow of $29.05B, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $8.71 in free cash annually.
FCF Yield
ERIC converts 8.67% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
12.06
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
0.09
vs 25 benchmark
P/B Ratio
Price to book value ratio
3.06
vs 25 benchmark
P/S Ratio
Price to sales ratio
1.46
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
0.42
vs 25 benchmark
Current Ratio
Current assets to current liabilities
1.29
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.29
vs 25 benchmark
ROA
Return on assets percentage
0.10
vs 25 benchmark
ROCE
Return on capital employed
0.19
vs 25 benchmark
How ERIC Stacks Against Its Sector Peers
| Metric | ERIC Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 12.06 | 34.79 | Better (Cheaper) |
| ROE | 28.92% | 1185.00% | Weak |
| Net Margin | 12.07% | -131296.00% (disorted) | Strong |
| Debt/Equity | 0.42 | 0.43 | Neutral |
| Current Ratio | 1.29 | 4.90 | Neutral |
| ROA | 9.94% | -325472.00% (disorted) | Weak |
ERIC outperforms its industry in 2 out of 6 key metrics, particularly excelling in Net Margin, but lagging in ROE.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews Telefonaktiebolaget LM Ericsson (publ)'s 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
8.24%
Industry Style: Growth, Innovation, High Beta
GrowingEPS CAGR
-99.11%
Industry Style: Growth, Innovation, High Beta
DecliningFCF CAGR
172.03%
Industry Style: Growth, Innovation, High Beta
High Growth