ERICSSON LM-A SHS (ERCG.DE) Stock Fundamental Analysis
FRA:ERCG - Deutsche Boerse Ag - SE0000108649 - Common Stock - Currency: EUR
We assign a fundamental rating of 5 out of 10 to ERCG. ERCG was compared to 25 industry peers in the Communications Equipment industry. While ERCG belongs to the best of the industry regarding profitability, there are some minor concerns on its financial health. ERCG is valued quite cheap, but it does not seem to be growing.
1. Profitability
1.1 Basic Checks
In the past year ERCG was profitable.
In the past year ERCG had a positive cash flow from operations.
Of the past 5 years ERCG 4 years were profitable.
In the past 5 years ERCG always reported a positive cash flow from operatings.
1.2 Ratios
The Return On Assets of ERCG (0.58%) is better than 68.00% of its industry peers.
ERCG has a better Return On Equity (1.87%) than 68.00% of its industry peers.
With an excellent Return On Invested Capital value of 12.87%, ERCG belongs to the best of the industry, outperforming 92.00% of the companies in the same industry.
Measured over the past 3 years, the Average Return On Invested Capital for ERCG is in line with the industry average of 7.46%.
The 3 year average ROIC (9.43%) for ERCG is below the current ROIC(12.87%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 0.58% | ||
| ROE | 1.87% | ||
| ROIC | 12.87% |
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
With a decent Profit Margin value of 0.65%, ERCG is doing good in the industry, outperforming 68.00% of the companies in the same industry.
In the last couple of years the Profit Margin of ERCG has declined.
ERCG has a Operating Margin of 10.72%. This is amongst the best in the industry. ERCG outperforms 88.00% of its industry peers.
ERCG's Operating Margin has improved in the last couple of years.
ERCG has a Gross Margin of 46.21%. This is comparable to the rest of the industry: ERCG outperforms 60.00% of its industry peers.
In the last couple of years the Gross Margin of ERCG has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 10.72% | ||
| PM (TTM) | 0.65% | ||
| GM | 46.21% |
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
The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so ERCG is creating value.
Compared to 1 year ago, ERCG has about the same amount of shares outstanding.
Compared to 5 years ago, ERCG has more shares outstanding
The debt/assets ratio for ERCG has been reduced compared to a year ago.
2.2 Solvency
ERCG has a debt to FCF ratio of 1.02. This is a very positive value and a sign of high solvency as it would only need 1.02 years to pay back of all of its debts.
The Debt to FCF ratio of ERCG (1.02) is better than 88.00% of its industry peers.
A Debt/Equity ratio of 0.41 indicates that ERCG is not too dependend on debt financing.
Looking at the Debt to Equity ratio, with a value of 0.41, ERCG is in line with its industry, outperforming 56.00% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.41 | ||
| Debt/FCF | 1.02 | ||
| Altman-Z | N/A |
ROIC/WACC1.9
WACC6.77%
2.3 Liquidity
ERCG has a Current Ratio of 1.09. This is a normal value and indicates that ERCG is financially healthy and should not expect problems in meeting its short term obligations.
Looking at the Current ratio, with a value of 1.09, ERCG is doing worse than 80.00% of the companies in the same industry.
ERCG has a Quick Ratio of 1.09. This is a bad value and indicates that ERCG is not financially healthy enough and could expect problems in meeting its short term obligations.
ERCG's Quick ratio of 0.88 is on the low side compared to the rest of the industry. ERCG is outperformed by 72.00% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.09 | ||
| Quick Ratio | 0.88 |
3. Growth
3.1 Past
ERCG shows a strong negative growth in Earnings Per Share. In the last year the EPS decreased by -46.92%.
The earnings per share for ERCG have been decreasing by -17.01% on average. This is quite bad
Looking at the last year, ERCG shows a decrease in Revenue. The Revenue has decreased by -1.79% in the last year.
The Revenue has been growing slightly by 1.76% on average over the past years.
EPS 1Y (TTM)-46.92%
EPS 3Y-38.27%
EPS 5Y-17.01%
EPS Q2Q%60.24%
Revenue 1Y (TTM)-1.79%
Revenue growth 3Y2.19%
Revenue growth 5Y1.76%
Sales Q2Q%3.19%
3.2 Future
Based on estimates for the next years, ERCG will show a very strong growth in Earnings Per Share. The EPS will grow by 45.47% on average per year.
ERCG is expected to show a decrease in Revenue. In the coming years, the Revenue will decrease by -0.82% yearly.
EPS Next Y267.53%
EPS Next 2Y93.12%
EPS Next 3Y58.42%
EPS Next 5Y45.47%
Revenue Next Year0.78%
Revenue Next 2Y1.01%
Revenue Next 3Y1.39%
Revenue Next 5Y-0.82%
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 accelerating.
When comparing the Revenue 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
With a Price/Earnings ratio of 35.50, ERCG can be considered very expensive at the moment.
Compared to the rest of the industry, the Price/Earnings ratio of ERCG indicates a somewhat cheap valuation: ERCG is cheaper than 76.00% of the companies listed in the same industry.
ERCG's Price/Earnings ratio indicates a valuation a bit more expensive than the S&P500 average which is at 28.79.
The Price/Forward Earnings ratio is 12.26, which indicates a correct valuation of ERCG.
Based on the Price/Forward Earnings ratio, ERCG is valued cheaper than 88.00% of the companies in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 21.38, ERCG is valued a bit cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 35.5 | ||
| Fwd PE | 12.26 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, ERCG is valued cheaply inside the industry as 92.00% of the companies are valued more expensively.
Based on the Price/Free Cash Flow ratio, ERCG is valued cheaply inside the industry as 88.00% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 6.24 | ||
| EV/EBITDA | 6.65 |
4.3 Compensation for Growth
ERCG's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
The decent profitability rating of ERCG may justify a higher PE ratio.
ERCG's earnings are expected to grow with 58.42% in the coming years. This may justify a more expensive valuation.
PEG (NY)0.13
PEG (5Y)N/A
EPS Next 2Y93.12%
EPS Next 3Y58.42%
5. Dividend
5.1 Amount
ERCG has a Yearly Dividend Yield of 3.60%.
ERCG's Dividend Yield is rather good when compared to the industry average which is at 3.71. ERCG pays more dividend than 92.00% of the companies in the same industry.
ERCG's Dividend Yield is a higher than the S&P500 average which is at 2.47.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.6% |
5.2 History
The dividend of ERCG is nicely growing with an annual growth rate of 22.02%!
Dividend Growth(5Y)22.02%
Div Incr Years4
Div Non Decr Years5
5.3 Sustainability
ERCG pays out 573.48% of its income as dividend. This is not a sustainable payout ratio.
The dividend of ERCG is growing, but earnings are growing more, so the dividend growth is sustainable.
DP573.48%
EPS Next 2Y93.12%
EPS Next 3Y58.42%
FRA:ERCG (4/16/2025, 7:00:00 PM)
7.1
+0.98 (+16.01%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupTechnology Hardware & Equipment
GICS IndustryCommunications Equipment
Earnings (Last)
Earnings (Next)
Inst Owners52.48%
Inst Owner ChangeN/A
Ins Owners0.03%
Ins Owner ChangeN/A
Market Cap23.66B
Analysts54.48
Price Target7.79 (9.72%)
Short Float %N/A
Short RatioN/A
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.6% |
Yearly Dividend0.25
Dividend Growth(5Y)22.02%
DP573.48%
Div Incr Years4
Div Non Decr Years5
Ex-DateN/A
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)19.55%
Min EPS beat(2)-10.72%
Max EPS beat(2)49.81%
EPS beat(4)2
Avg EPS beat(4)-132.41%
Min EPS beat(4)-588.91%
Max EPS beat(4)49.81%
EPS beat(8)6
Avg EPS beat(8)-35.54%
EPS beat(12)7
Avg EPS beat(12)-21.49%
EPS beat(16)9
Avg EPS beat(16)-14.64%
Revenue beat(2)0
Avg Revenue beat(2)-1.28%
Min Revenue beat(2)-2.1%
Max Revenue beat(2)-0.45%
Revenue beat(4)1
Avg Revenue beat(4)-0.39%
Min Revenue beat(4)-2.1%
Max Revenue beat(4)1.67%
Revenue beat(8)1
Avg Revenue beat(8)-1.78%
Revenue beat(12)5
Avg Revenue beat(12)-0.75%
Revenue beat(16)7
Avg Revenue beat(16)-0.79%
PT rev (1m)0%
PT rev (3m)8.92%
EPS NQ rev (1m)16.69%
EPS NQ rev (3m)3.82%
EPS NY rev (1m)-4.37%
EPS NY rev (3m)-2.45%
Revenue NQ rev (1m)-2.42%
Revenue NQ rev (3m)-3.69%
Revenue NY rev (1m)-2.59%
Revenue NY rev (3m)-2.56%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 35.5 | ||
| Fwd PE | 12.26 | ||
| P/S | 1.04 | ||
| P/FCF | 6.24 | ||
| P/OCF | 5.72 | ||
| P/B | 3.03 | ||
| P/tB | 11.24 | ||
| EV/EBITDA | 6.65 |
EPS(TTM)0.2
EY2.82%
EPS(NY)0.58
Fwd EY8.16%
FCF(TTM)1.14
FCFY16.01%
OCF(TTM)1.24
OCFY17.5%
SpS6.81
BVpS2.35
TBVpS0.63
PEG (NY)0.13
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 0.58% | ||
| ROE | 1.87% | ||
| ROCE | 18.28% | ||
| ROIC | 12.87% | ||
| ROICexc | 19.49% | ||
| ROICexgc | 55.79% | ||
| OM | 10.72% | ||
| PM (TTM) | 0.65% | ||
| GM | 46.21% | ||
| FCFM | 16.7% |
ROA(3y)-1.18%
ROA(5y)2.06%
ROE(3y)-4.3%
ROE(5y)5.63%
ROIC(3y)9.43%
ROIC(5y)10.87%
ROICexc(3y)13.21%
ROICexc(5y)15.92%
ROICexgc(3y)41.96%
ROICexgc(5y)38.68%
ROCE(3y)13.4%
ROCE(5y)15.43%
ROICexcg growth 3Y9.12%
ROICexcg growth 5Y7.91%
ROICexc growth 3Y-8.84%
ROICexc growth 5Y4.9%
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%
F-Score7
Asset Turnover0.9
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.41 | ||
| Debt/FCF | 1.02 | ||
| Debt/EBITDA | 0.94 | ||
| Cap/Depr | 36.59% | ||
| Cap/Sales | 1.55% | ||
| Interest Coverage | 10.63 | ||
| Cash Conversion | 122.12% | ||
| Profit Quality | 2589.32% | ||
| Current Ratio | 1.09 | ||
| Quick Ratio | 0.88 | ||
| Altman-Z | N/A |
F-Score7
WACC6.77%
ROIC/WACC1.9
Cap/Depr(3y)47.04%
Cap/Depr(5y)51.35%
Cap/Sales(3y)1.94%
Cap/Sales(5y)2.02%
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)-46.92%
EPS 3Y-38.27%
EPS 5Y-17.01%
EPS Q2Q%60.24%
EPS Next Y267.53%
EPS Next 2Y93.12%
EPS Next 3Y58.42%
EPS Next 5Y45.47%
Revenue 1Y (TTM)-1.79%
Revenue growth 3Y2.19%
Revenue growth 5Y1.76%
Sales Q2Q%3.19%
Revenue Next Year0.78%
Revenue Next 2Y1.01%
Revenue Next 3Y1.39%
Revenue Next 5Y-0.82%
EBIT growth 1Y48.21%
EBIT growth 3Y-10.75%
EBIT growth 5Y16.26%
EBIT Next Year70.53%
EBIT Next 3Y22.61%
EBIT Next 5Y17.34%
FCF growth 1Y126.71%
FCF growth 3Y7.36%
FCF growth 5Y33.08%
OCF growth 1Y82.12%
OCF growth 3Y5.8%
OCF growth 5Y22.35%