ERICSSON LM-A SHS (ERCG.DE) Stock Fundamental Analysis
Europe - Frankfurt Stock Exchange - FRA:ERCG - SE0000108649 - Common Stock
8.38 EUR
+0.01 (+0.12%)
We assign a fundamental rating of 6 out of 10 to ERCG. ERCG was compared to 28 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 may be a bit undervalued, certainly considering the very reasonable score on growth ERCG also has an excellent dividend rating.
1. Profitability
1.1 Basic Checks
ERCG had positive earnings in the past year.
In the past year ERCG had a positive cash flow from operations.
ERCG had positive earnings in 4 of the past 5 years.
In the past 5 years ERCG always reported a positive cash flow from operatings.
1.2 Ratios
ERCG has a Return On Assets of 8.72%. This is amongst the best in the industry. ERCG outperforms 85.71% of its industry peers.
Looking at the Return On Equity, with a value of 24.01%, ERCG belongs to the top of the industry, outperforming 89.29% of the companies in the same industry.
With an excellent Return On Invested Capital value of 13.55%, ERCG belongs to the best of the industry, outperforming 85.71% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for ERCG is in line with the industry average of 10.09%.
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
With an excellent Profit Margin value of 10.26%, ERCG belongs to the best of the industry, outperforming 85.71% of the companies in the same industry.
In the last couple of years the Profit Margin of ERCG has declined.
ERCG has a better Operating Margin (12.97%) than 82.14% of its industry peers.
In the last couple of years the Operating Margin of ERCG has grown nicely.
ERCG has a Gross Margin (47.62%) which is in line with its industry peers.
ERCG'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
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
ERCG has a better debt/assets ratio than last year.
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.
The Debt to FCF ratio of ERCG (1.45) is better than 82.14% of its industry peers.
A Debt/Equity ratio of 0.35 indicates that ERCG is not too dependend on debt financing.
ERCG has a Debt to Equity ratio of 0.35. This is comparable to the rest of the industry: ERCG outperforms 53.57% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.35 | ||
| Debt/FCF | 1.45 | ||
| Altman-Z | N/A |
ROIC/WACC1.95
WACC6.96%
2.3 Liquidity
A Current Ratio of 1.17 indicates that ERCG should not have too much problems paying its short term obligations.
ERCG has a Current ratio of 1.17. This is in the lower half of the industry: ERCG underperforms 78.57% 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: 71.43% 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
ERCG shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 541.12%, which is quite impressive.
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 -2.65% in the last year.
The Revenue has been growing slightly by 1.76% on average over the past years.
EPS 1Y (TTM)541.12%
EPS 3Y-38.27%
EPS 5Y-17.01%
EPS Q2Q%113.66%
Revenue 1Y (TTM)-2.65%
Revenue growth 3Y2.19%
Revenue growth 5Y1.76%
Sales Q2Q%-8.99%
3.2 Future
ERCG is expected to show a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 30.35% yearly.
ERCG is expected to show a decrease in Revenue. In the coming years, the Revenue will decrease by -0.85% yearly.
EPS Next Y348.24%
EPS Next 2Y96.63%
EPS Next 3Y59.26%
EPS Next 5Y30.35%
Revenue Next Year-4.89%
Revenue Next 2Y-2.58%
Revenue Next 3Y-1.15%
Revenue Next 5Y-0.85%
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
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
With a Price/Earnings ratio of 10.88, the valuation of ERCG can be described as very reasonable.
ERCG's Price/Earnings ratio is rather cheap when compared to the industry. ERCG is cheaper than 92.86% of the companies in the same industry.
ERCG is valuated cheaply when we compare the Price/Earnings ratio to 26.15, which is the current average of the S&P500 Index.
Based on the Price/Forward Earnings ratio of 13.94, 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 82.14% of the companies in the same industry.
ERCG's Price/Forward Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 36.22.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 10.88 | ||
| Fwd PE | 13.94 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of ERCG indicates a rather cheap valuation: ERCG is cheaper than 89.29% of the companies listed in the same industry.
ERCG's Price/Free Cash Flow ratio is a bit cheaper when compared to the industry. ERCG is cheaper than 71.43% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 10.09 | ||
| EV/EBITDA | 7.14 |
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 excellent profitability rating of ERCG may justify a higher PE ratio.
A more expensive valuation may be justified as ERCG's earnings are expected to grow with 59.26% in the coming years.
PEG (NY)0.03
PEG (5Y)N/A
EPS Next 2Y96.63%
EPS Next 3Y59.26%
5. Dividend
5.1 Amount
ERCG has a Yearly Dividend Yield of 3.12%. Purely for dividend investing, there may be better candidates out there.
Compared to an average industry Dividend Yield of 5.63, ERCG pays a better dividend. On top of this ERCG pays more dividend than 89.29% of the companies listed in the same industry.
ERCG's Dividend Yield is a higher than the S&P500 average which is at 2.32.
| 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
37.84% of the earnings are spent on dividend by ERCG. This is a low number and sustainable payout ratio.
ERCG's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP37.84%
EPS Next 2Y96.63%
EPS Next 3Y59.26%
FRA:ERCG (12/2/2025, 7:00:00 PM)
8.38
+0.01 (+0.12%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupTechnology Hardware & Equipment
GICS IndustryCommunications Equipment
Earnings (Last)
Earnings (Next)
Inst Owners54.97%
Inst Owner ChangeN/A
Ins Owners0.07%
Ins Owner ChangeN/A
Market Cap27.93B
Revenue(TTM)240.31B
Net Income(TTM)24.64B
Analysts56.55
Price Target7.96 (-5.01%)
Short Float %N/A
Short RatioN/A
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.12% |
Yearly Dividend0.25
Dividend Growth(5Y)22.02%
DP37.84%
Div Incr Years1
Div Non Decr Years6
Ex-DateN/A
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)49.11%
Min EPS beat(2)20.62%
Max EPS beat(2)77.6%
EPS beat(4)3
Avg EPS beat(4)34.33%
Min EPS beat(4)-10.72%
Max EPS beat(4)77.6%
EPS beat(8)6
Avg EPS beat(8)-29.88%
EPS beat(12)9
Avg EPS beat(12)-11.71%
EPS beat(16)10
Avg EPS beat(16)-8.77%
Revenue beat(2)0
Avg Revenue beat(2)-3.63%
Min Revenue beat(2)-6.39%
Max Revenue beat(2)-0.88%
Revenue beat(4)0
Avg Revenue beat(4)-2.46%
Min Revenue beat(4)-6.39%
Max Revenue beat(4)-0.45%
Revenue beat(8)1
Avg Revenue beat(8)-2.31%
Revenue beat(12)3
Avg Revenue beat(12)-1.5%
Revenue beat(16)7
Avg Revenue beat(16)-0.68%
PT rev (1m)9.4%
PT rev (3m)8.98%
EPS NQ rev (1m)0%
EPS NQ rev (3m)14.08%
EPS NY rev (1m)20.53%
EPS NY rev (3m)19.27%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)-0.27%
Revenue NY rev (1m)-1.38%
Revenue NY rev (3m)-1.49%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 10.88 | ||
| Fwd PE | 13.94 | ||
| P/S | 1.28 | ||
| P/FCF | 10.09 | ||
| P/OCF | 9.04 | ||
| P/B | 2.99 | ||
| P/tB | 6.84 | ||
| EV/EBITDA | 7.14 |
EPS(TTM)0.77
EY9.19%
EPS(NY)0.6
Fwd EY7.17%
FCF(TTM)0.83
FCFY9.91%
OCF(TTM)0.93
OCFY11.07%
SpS6.56
BVpS2.8
TBVpS1.22
PEG (NY)0.03
PEG (5Y)N/A
Graham Number6.97
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 8.72% | ||
| ROE | 24.01% | ||
| ROCE | 19.24% | ||
| ROIC | 13.55% | ||
| ROICexc | 19.78% | ||
| ROICexgc | 41.31% | ||
| OM | 12.97% | ||
| PM (TTM) | 10.26% | ||
| GM | 47.62% | ||
| FCFM | 12.65% |
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%
ROICexgc growth 3Y9.12%
ROICexgc 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-Score6
Asset Turnover0.85
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.35 | ||
| Debt/FCF | 1.45 | ||
| Debt/EBITDA | 0.87 | ||
| Cap/Depr | 36.83% | ||
| Cap/Sales | 1.48% | ||
| Interest Coverage | 13.31 | ||
| Cash Conversion | 83.18% | ||
| Profit Quality | 123.37% | ||
| Current Ratio | 1.17 | ||
| Quick Ratio | 0.94 | ||
| Altman-Z | N/A |
F-Score6
WACC6.96%
ROIC/WACC1.95
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)541.12%
EPS 3Y-38.27%
EPS 5Y-17.01%
EPS Q2Q%113.66%
EPS Next Y348.24%
EPS Next 2Y96.63%
EPS Next 3Y59.26%
EPS Next 5Y30.35%
Revenue 1Y (TTM)-2.65%
Revenue growth 3Y2.19%
Revenue growth 5Y1.76%
Sales Q2Q%-8.99%
Revenue Next Year-4.89%
Revenue Next 2Y-2.58%
Revenue Next 3Y-1.15%
Revenue Next 5Y-0.85%
EBIT growth 1Y54.66%
EBIT growth 3Y-10.75%
EBIT growth 5Y16.26%
EBIT Next Year81.48%
EBIT Next 3Y20.93%
EBIT Next 5Y15.14%
FCF growth 1Y392.6%
FCF growth 3Y7.36%
FCF growth 5Y33.08%
OCF growth 1Y169.74%
OCF growth 3Y5.8%
OCF growth 5Y22.35%
ERICSSON LM-A SHS / ERCG.DE FAQ
What is the fundamental rating for ERCG stock?
ChartMill assigns a fundamental rating of 6 / 10 to ERCG.DE.
Can you provide the valuation status for ERICSSON LM-A SHS?
ChartMill assigns a valuation rating of 9 / 10 to ERICSSON LM-A SHS (ERCG.DE). This can be considered as Undervalued.
What is the profitability of ERCG stock?
ERICSSON LM-A SHS (ERCG.DE) has a profitability rating of 8 / 10.
What is the expected EPS growth for ERICSSON LM-A SHS (ERCG.DE) stock?
The Earnings per Share (EPS) of ERICSSON LM-A SHS (ERCG.DE) is expected to grow by 348.24% in the next year.
Is the dividend of ERICSSON LM-A SHS sustainable?
The dividend rating of ERICSSON LM-A SHS (ERCG.DE) is 7 / 10 and the dividend payout ratio is 37.84%.