ERICSSON LM-B SHS (ERCB.DE) Stock Fundamental Analysis
Europe - Frankfurt Stock Exchange - FRA:ERCB - SE0000108656 - Common Stock
8.9 EUR
+0.8 (+9.93%)
Overall ERCB gets a fundamental rating of 5 out of 10. We evaluated ERCB against 31 industry peers in the Communications Equipment industry. ERCB has an excellent profitability rating, but there are some minor concerns on its financial health. ERCB is cheap, but on the other hand it scores bad on growth. ERCB also has an excellent dividend rating.
1. Profitability
1.1 Basic Checks
- In the past year ERCB was profitable.
- In the past year ERCB had a positive cash flow from operations.
- In multiple years ERCB reported negative net income over the last 5 years.
- Of the past 5 years ERCB 4 years had a positive operating cash flow.
1.2 Ratios
- Looking at the Return On Assets, with a value of 8.72%, ERCB belongs to the top of the industry, outperforming 90.32% of the companies in the same industry.
- Looking at the Return On Equity, with a value of 24.01%, ERCB belongs to the top of the industry, outperforming 96.77% of the companies in the same industry.
- ERCB has a better Return On Invested Capital (13.55%) than 90.32% of its industry peers.
- The Average Return On Invested Capital over the past 3 years for ERCB is in line with the industry average of 10.63%.
- The last Return On Invested Capital (13.55%) for ERCB is above the 3 year average (9.43%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 8.72% | ||
| ROE | 24.01% | ||
| ROIC | 13.55% |
ROA(3y)-1.18%
ROA(5y)2.06%
ROE(3y)-4.3%
ROE(5y)5.63%
ROIC(3y)9.43%
ROIC(5y)10.87%
1.3 Margins
- Looking at the Profit Margin, with a value of 10.26%, ERCB belongs to the top of the industry, outperforming 87.10% of the companies in the same industry.
- ERCB's Profit Margin has declined in the last couple of years.
- ERCB's Operating Margin of 12.97% is amongst the best of the industry. ERCB outperforms 83.87% of its industry peers.
- ERCB's Operating Margin has improved in the last couple of years.
- Looking at the Gross Margin, with a value of 47.62%, ERCB is in the better half of the industry, outperforming 64.52% of the companies in the same industry.
- ERCB's Gross Margin has improved in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 12.97% | ||
| PM (TTM) | 10.26% | ||
| GM | 47.62% |
OM growth 3Y-12.66%
OM growth 5Y14.26%
PM growth 3Y-90.62%
PM growth 5Y-61.69%
GM growth 3Y1.11%
GM growth 5Y3.7%
2. Health
2.1 Basic Checks
- With a Return on Invested Capital (ROIC) just above the Cost of Capital (WACC), ERCB is creating some value.
- ERCB has no outstanding debt. Therefor its Debt/Equity and Debt/FCF ratios are 0 and belong to the best of the industry.
2.2 Solvency
- The Debt to FCF ratio of ERCB is 1.45, which is an excellent value as it means it would take ERCB, only 1.45 years of fcf income to pay off all of its debts.
- ERCB's Debt to FCF ratio of 1.45 is amongst the best of the industry. ERCB outperforms 83.87% of its industry peers.
- ERCB has a Debt/Equity ratio of 0.35. This is a healthy value indicating a solid balance between debt and equity.
- With a Debt to Equity ratio value of 0.35, ERCB perfoms like the industry average, outperforming 58.06% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.35 | ||
| Debt/FCF | 1.45 | ||
| Altman-Z | N/A |
ROIC/WACC1.76
WACC7.7%
2.3 Liquidity
- A Current Ratio of 1.17 indicates that ERCB should not have too much problems paying its short term obligations.
- ERCB has a Current ratio of 1.17. This is in the lower half of the industry: ERCB underperforms 70.97% of its industry peers.
- ERCB has a Quick Ratio of 1.17. This is a bad value and indicates that ERCB is not financially healthy enough and could expect problems in meeting its short term obligations.
- With a Quick ratio value of 0.94, ERCB is not doing good in the industry: 64.52% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.17 | ||
| Quick Ratio | 0.94 |
3. Growth
3.1 Past
- The Earnings Per Share has grown by an impressive 413.40% over the past year.
- ERCB shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 8.51% yearly.
EPS 1Y (TTM)413.4%
EPS 3Y11.79%
EPS 5Y8.51%
EPS Q2Q%15.04%
Revenue 1Y (TTM)N/A
Revenue growth 3YN/A
Revenue growth 5YN/A
Sales Q2Q%-8.73%
3.2 Future
- The Earnings Per Share is expected to decrease by -10.81% on average over the next years. This is quite bad
- ERCB is expected to show a decrease in Revenue. In the coming years, the Revenue will decrease by -0.79% yearly.
EPS Next Y-23.51%
EPS Next 2Y-10.55%
EPS Next 3Y-9.63%
EPS Next 5Y-10.81%
Revenue Next Year-0.39%
Revenue Next 2Y0.82%
Revenue Next 3Y0.13%
Revenue Next 5Y-0.79%
3.3 Evolution
- When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
- Based on the Price/Earnings ratio of 10.72, the valuation of ERCB can be described as reasonable.
- ERCB's Price/Earnings ratio is rather cheap when compared to the industry. ERCB is cheaper than 96.77% of the companies in the same industry.
- Compared to an average S&P500 Price/Earnings ratio of 27.21, ERCB is valued rather cheaply.
- Based on the Price/Forward Earnings ratio of 14.03, the valuation of ERCB can be described as correct.
- Compared to the rest of the industry, the Price/Forward Earnings ratio of ERCB indicates a rather cheap valuation: ERCB is cheaper than 93.55% of the companies listed in the same industry.
- ERCB's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 25.98.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 10.72 | ||
| Fwd PE | 14.03 |
4.2 Price Multiples
- 93.55% of the companies in the same industry are more expensive than ERCB, based on the Enterprise Value to EBITDA ratio.
- Based on the Price/Free Cash Flow ratio, ERCB is valued cheaply inside the industry as 80.65% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 10.31 | ||
| EV/EBITDA | 7.3 |
4.3 Compensation for Growth
- The excellent profitability rating of ERCB may justify a higher PE ratio.
- A cheap valuation may be justified as ERCB's earnings are expected to decrease with -9.63% in the coming years.
PEG (NY)N/A
PEG (5Y)1.26
EPS Next 2Y-10.55%
EPS Next 3Y-9.63%
5. Dividend
5.1 Amount
- ERCB has a Yearly Dividend Yield of 3.32%. Purely for dividend investing, there may be better candidates out there.
- Compared to an average industry Dividend Yield of 2.62, ERCB pays a better dividend. On top of this ERCB pays more dividend than 93.55% of the companies listed in the same industry.
- ERCB's Dividend Yield is rather good when compared to the S&P500 average which is at 1.81.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.32% |
5.2 History
- The dividend of ERCB is nicely growing with an annual growth rate of 22.02%!
Dividend Growth(5Y)22.02%
Div Incr Years1
Div Non Decr Years6
5.3 Sustainability
- 37.84% of the earnings are spent on dividend by ERCB. This is a low number and sustainable payout ratio.
DP37.84%
EPS Next 2Y-10.55%
EPS Next 3Y-9.63%
ERICSSON LM-B SHS / ERCB.DE FAQ
Can you provide the ChartMill fundamental rating for ERICSSON LM-B SHS?
ChartMill assigns a fundamental rating of 5 / 10 to ERCB.DE.
What is the valuation status for ERCB stock?
ChartMill assigns a valuation rating of 7 / 10 to ERICSSON LM-B SHS (ERCB.DE). This can be considered as Undervalued.
What is the profitability of ERCB stock?
ERICSSON LM-B SHS (ERCB.DE) has a profitability rating of 8 / 10.
What is the valuation of ERICSSON LM-B SHS based on its PE and PB ratios?
The Price/Earnings (PE) ratio for ERICSSON LM-B SHS (ERCB.DE) is 10.72 and the Price/Book (PB) ratio is 3.05.
What is the financial health of ERICSSON LM-B SHS (ERCB.DE) stock?
The financial health rating of ERICSSON LM-B SHS (ERCB.DE) is 4 / 10.