ERICSSON LM-A SHS (ERCG.DE) Stock Fundamental Analysis
Europe - Frankfurt Stock Exchange - FRA:ERCG - SE0000108649 - Common Stock
8.93 EUR
+0.73 (+8.9%)
ERCG gets a fundamental rating of 5 out of 10. The analysis compared the fundamentals against 31 industry peers in the Communications Equipment industry. ERCG has an excellent profitability rating, but there are some minor concerns on its financial health. ERCG has a valuation in line with the averages, but it does not seem to be growing. ERCG also has an excellent dividend rating.
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.
- The reported net income has been mixed in the past 5 years: ERCG reported negative net income in multiple years.
- Of the past 5 years ERCG 4 years had a positive operating cash flow.
1.2 Ratios
- ERCG has a Return On Assets of 8.72%. This is amongst the best in the industry. ERCG outperforms 87.10% of its industry peers.
- The Return On Equity of ERCG (24.01%) is better than 93.55% of its industry peers.
- The Return On Invested Capital of ERCG (13.55%) is better than 87.10% of its industry peers.
- The Average Return On Invested Capital over the past 3 years for ERCG is in line with the industry average of 10.63%.
- The 3 year average ROIC (9.43%) for ERCG is below the current ROIC(13.55%), indicating increased profibility in the last year.
| 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
- ERCG has a better Profit Margin (10.26%) than 83.87% of its industry peers.
- ERCG's Profit Margin has declined in the last couple of years.
- Looking at the Operating Margin, with a value of 12.97%, ERCG belongs to the top of the industry, outperforming 80.65% of the companies in the same industry.
- In the last couple of years the Operating Margin of ERCG has grown nicely.
- The Gross Margin of ERCG (47.62%) is better than 61.29% of its industry peers.
- In the last couple of years the Gross Margin of ERCG has grown nicely.
| 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
- ERCG has a Return on Invested Capital (ROIC), which is just above the Cost of Capital (WACC), which means it is creating some value.
- ERCG 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
- ERCG has a debt to FCF ratio of 1.45. This is a very positive value and a sign of high solvency as it would only need 1.45 years to pay back of all of its debts.
- ERCG has a better Debt to FCF ratio (1.45) than 80.65% of its industry peers.
- A Debt/Equity ratio of 0.35 indicates that ERCG is not too dependend on debt financing.
- With a Debt to Equity ratio value of 0.35, ERCG perfoms like the industry average, outperforming 54.84% 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
- ERCG has a Current Ratio of 1.17. This is a normal value and indicates that ERCG is financially healthy and should not expect problems in meeting its short term obligations.
- ERCG's Current ratio of 1.17 is on the low side compared to the rest of the industry. ERCG is outperformed by 74.19% of its industry peers.
- A Quick Ratio of 0.94 indicates that ERCG may have some problems paying its short term obligations.
- With a Quick ratio value of 0.94, ERCG is not doing good in the industry: 67.74% 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.
- The Earnings Per Share has been growing by 8.51% on average over the past years. This is quite good.
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
- ERCG 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
- The Price/Earnings ratio is 10.76, which indicates a very decent valuation of ERCG.
- Based on the Price/Earnings ratio, ERCG is valued cheaply inside the industry as 93.55% of the companies are valued more expensively.
- ERCG is valuated cheaply when we compare the Price/Earnings ratio to 27.21, which is the current average of the S&P500 Index.
- Based on the Price/Forward Earnings ratio of 14.07, the valuation of ERCG can be described as correct.
- ERCG's Price/Forward Earnings ratio is rather cheap when compared to the industry. ERCG is cheaper than 87.10% of the companies in the same industry.
- Compared to an average S&P500 Price/Forward Earnings ratio of 25.98, ERCG is valued a bit cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 10.76 | ||
| Fwd PE | 14.07 |
4.2 Price Multiples
- ERCG's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. ERCG is cheaper than 90.32% of the companies in the same industry.
- 77.42% of the companies in the same industry are more expensive than ERCG, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 10.35 | ||
| EV/EBITDA | 7.33 |
4.3 Compensation for Growth
- The excellent profitability rating of ERCG may justify a higher PE ratio.
- ERCG's earnings are expected to decrease with -9.63% in the coming years. This may justify a cheaper valuation.
PEG (NY)N/A
PEG (5Y)1.26
EPS Next 2Y-10.55%
EPS Next 3Y-9.63%
5. Dividend
5.1 Amount
- ERCG 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, ERCG pays a better dividend. On top of this ERCG pays more dividend than 90.32% of the companies listed in the same industry.
- ERCG'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 ERCG 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 ERCG. This is a low number and sustainable payout ratio.
DP37.84%
EPS Next 2Y-10.55%
EPS Next 3Y-9.63%
ERICSSON LM-A SHS / ERCG.DE FAQ
Can you provide the ChartMill fundamental rating for ERICSSON LM-A SHS?
ChartMill assigns a fundamental rating of 5 / 10 to ERCG.DE.
What is the valuation status of ERICSSON LM-A SHS (ERCG.DE) stock?
ChartMill assigns a valuation rating of 6 / 10 to ERICSSON LM-A SHS (ERCG.DE). This can be considered as Fairly Valued.
What is the profitability of ERCG stock?
ERICSSON LM-A SHS (ERCG.DE) has a profitability rating of 8 / 10.
What are the PE and PB ratios of ERICSSON LM-A SHS (ERCG.DE) stock?
The Price/Earnings (PE) ratio for ERICSSON LM-A SHS (ERCG.DE) is 10.76 and the Price/Book (PB) ratio is 3.06.
How financially healthy is ERICSSON LM-A SHS?
The financial health rating of ERICSSON LM-A SHS (ERCG.DE) is 3 / 10.