ERICSSON LM-A SHS (ERCG.DE) Stock Fundamental Analysis
Europe • Frankfurt Stock Exchange • FRA:ERCG • SE0000108649
9.19 EUR
-0.02 (-0.22%)
Last: Jan 30, 2026, 07:00 PM
We assign a fundamental rating of 5 out of 10 to ERCG. ERCG was compared to 32 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 has a valuation in line with the averages, but on the other hand it scores bad on growth. Finally ERCG also has an excellent dividend rating.
1. Profitability
1.1 Basic Checks
- In the past year ERCG was profitable.
- ERCG had a positive operating cash flow in the past year.
- Of the past 5 years ERCG 4 years were profitable.
- ERCG had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
- With an excellent Return On Assets value of 10.18%, ERCG belongs to the best of the industry, outperforming 81.25% of the companies in the same industry.
- ERCG has a Return On Equity of 25.95%. This is amongst the best in the industry. ERCG outperforms 90.63% of its industry peers.
- ERCG's Return On Invested Capital of 8.85% is fine compared to the rest of the industry. ERCG outperforms 68.75% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 10.18% | ||
| ROE | 25.95% | ||
| ROIC | 8.85% |
ROA(3y)N/A
ROA(5y)N/A
ROE(3y)N/A
ROE(5y)N/A
ROIC(3y)N/A
ROIC(5y)N/A
1.3 Margins
- ERCG's Profit Margin of 12.01% is amongst the best of the industry. ERCG outperforms 84.38% of its industry peers.
- ERCG's Profit Margin has improved in the last couple of years.
- ERCG has a Operating Margin of 14.08%. This is amongst the best in the industry. ERCG outperforms 81.25% of its industry peers.
- In the last couple of years the Operating Margin of ERCG has grown nicely.
- ERCG has a Gross Margin of 48.14%. This is comparable to the rest of the industry: ERCG outperforms 59.38% of its industry peers.
- In the last couple of years the Gross Margin of ERCG has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 14.08% | ||
| PM (TTM) | 12.01% | ||
| GM | 48.14% |
OM growth 3Y7.92%
OM growth 5Y2.1%
PM growth 3Y20.32%
PM growth 5Y9.81%
GM growth 3Y4.83%
GM growth 5Y3.45%
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 1.38. This is a very positive value and a sign of high solvency as it would only need 1.38 years to pay back of all of its debts.
- ERCG has a better Debt to FCF ratio (1.38) than 78.13% of its industry peers.
- ERCG has a Debt/Equity ratio of 0.32. This is a healthy value indicating a solid balance between debt and equity.
- ERCG has a Debt to Equity ratio (0.32) which is in line with its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.32 | ||
| Debt/FCF | 1.38 | ||
| Altman-Z | N/A |
ROIC/WACC1.24
WACC7.15%
2.3 Liquidity
- ERCG has a Current Ratio of 1.29. This is a normal value and indicates that ERCG is financially healthy and should not expect problems in meeting its short term obligations.
- ERCG has a worse Current ratio (1.29) than 71.88% of its industry peers.
- A Quick Ratio of 1.08 indicates that ERCG should not have too much problems paying its short term obligations.
- ERCG's Quick ratio of 1.08 is on the low side compared to the rest of the industry. ERCG is outperformed by 65.63% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.29 | ||
| Quick Ratio | 1.08 |
3. Growth
3.1 Past
- ERCG shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 413.40%, which is quite impressive.
- The Earnings Per Share has been growing by 8.51% on average over the past years. This is quite good.
- The Revenue has decreased by -4.52% in the past year.
- Measured over the past years, ERCG shows a small growth in Revenue. The Revenue has been growing by 0.37% on average per year.
EPS 1Y (TTM)413.4%
EPS 3Y11.79%
EPS 5Y8.51%
EPS Q2Q%15.04%
Revenue 1Y (TTM)-4.52%
Revenue growth 3Y-4.48%
Revenue growth 5Y0.37%
Sales Q2Q%-8.73%
3.2 Future
- Based on estimates for the next years, ERCG will show a very negative growth in Earnings Per Share. The EPS will decrease by -10.81% on average per year.
- 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.
- The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
- The Price/Earnings ratio is 11.07, which indicates a very decent valuation of ERCG.
- ERCG's Price/Earnings ratio is rather cheap when compared to the industry. ERCG is cheaper than 93.75% of the companies in the same industry.
- When comparing the Price/Earnings ratio of ERCG to the average of the S&P500 Index (28.32), we can say ERCG is valued rather cheaply.
- A Price/Forward Earnings ratio of 14.41 indicates a correct valuation of ERCG.
- Based on the Price/Forward Earnings ratio, ERCG is valued cheaply inside the industry as 87.50% of the companies are valued more expensively.
- When comparing the Price/Forward Earnings ratio of ERCG to the average of the S&P500 Index (25.57), we can say ERCG is valued slightly cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 11.07 | ||
| Fwd PE | 14.41 |
4.2 Price Multiples
- 87.50% of the companies in the same industry are more expensive than ERCG, based on the Enterprise Value to EBITDA ratio.
- ERCG's Price/Free Cash Flow ratio is a bit cheaper when compared to the industry. ERCG is cheaper than 75.00% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 11.04 | ||
| EV/EBITDA | 6.89 |
4.3 Compensation for Growth
- The decent profitability rating of ERCG may justify a higher PE ratio.
- A cheap valuation may be justified as ERCG's earnings are expected to decrease with -9.63% in the coming years.
PEG (NY)N/A
PEG (5Y)1.3
EPS Next 2Y-10.55%
EPS Next 3Y-9.63%
5. Dividend
5.1 Amount
- With a Yearly Dividend Yield of 3.12%, ERCG has a reasonable but not impressive dividend return.
- Compared to an average industry Dividend Yield of 2.64, ERCG pays a better dividend. On top of this ERCG pays more dividend than 87.50% 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 1.83.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.12% |
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
- 33.58% of the earnings are spent on dividend by ERCG. This is a low number and sustainable payout ratio.
DP33.58%
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 7 / 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 11.07 and the Price/Book (PB) ratio is 2.94.
How financially healthy is ERICSSON LM-A SHS?
The financial health rating of ERICSSON LM-A SHS (ERCG.DE) is 4 / 10.