ERICSSON LM-A SHS (ERCG.DE) Stock Fundamental Analysis
FRA:ERCG - Deutsche Boerse Ag - SE0000108649 - Common Stock - Currency: EUR
Taking everything into account, ERCG scores 5 out of 10 in our fundamental rating. ERCG was compared to 25 industry peers in the Communications Equipment industry. Both the profitability and the financial health of ERCG get a neutral evaluation. Nothing too spectacular is happening here. ERCG has a decent growth rate and is not valued too expensively.
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.
Each year in the past 5 years ERCG had a positive operating cash flow.
1.2 Ratios
ERCG's Return On Assets of -0.50% is fine compared to the rest of the industry. ERCG outperforms 62.50% of its industry peers.
Looking at the Return On Equity, with a value of -1.58%, ERCG is in the better half of the industry, outperforming 62.50% of the companies in the same industry.
Looking at the Return On Invested Capital, with a value of 9.24%, ERCG belongs to the top of the industry, outperforming 87.50% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | -0.5% | ||
| ROE | -1.58% | ||
| ROIC | 9.24% |
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
In the last couple of years the Profit Margin of ERCG has declined.
ERCG has a Operating Margin of 8.16%. This is in the better half of the industry: ERCG outperforms 75.00% of its industry peers.
In the last couple of years the Operating Margin of ERCG has declined.
Looking at the Gross Margin, with a value of 43.44%, ERCG is in line with its industry, outperforming 45.83% of the companies in the same industry.
In the last couple of years the Gross Margin of ERCG has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 8.16% | ||
| PM (TTM) | N/A | ||
| GM | 43.44% |
OM growth 3Y-36.4%
OM growth 5Y-5.54%
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
The Debt to FCF ratio of ERCG is 1.11, which is an excellent value as it means it would take ERCG, only 1.11 years of fcf income to pay off all of its debts.
Looking at the Debt to FCF ratio, with a value of 1.11, ERCG belongs to the top of the industry, outperforming 91.67% of the companies in the same industry.
ERCG has a Debt/Equity ratio of 0.44. This is a healthy value indicating a solid balance between debt and equity.
With a Debt to Equity ratio value of 0.44, ERCG perfoms like the industry average, outperforming 50.00% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.44 | ||
| Debt/FCF | 1.11 | ||
| Altman-Z | N/A |
ROIC/WACC1.31
WACC7.04%
2.3 Liquidity
ERCG has a Current Ratio of 1.19. This is a normal value and indicates that ERCG is financially healthy and should not expect problems in meeting its short term obligations.
With a Current ratio value of 1.19, ERCG is not doing good in the industry: 79.17% of the companies in the same industry are doing better.
A Quick Ratio of 0.95 indicates that ERCG may have some problems paying its short term obligations.
With a Quick ratio value of 0.95, ERCG is not doing good in the industry: 66.67% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.19 | ||
| Quick Ratio | 0.95 |
3. Growth
3.1 Past
The earnings per share for ERCG have decreased strongly by -60.46% in the last year.
Measured over the past years, ERCG shows a very negative growth in Earnings Per Share. The EPS has been decreasing by -17.01% on average per year.
The Revenue has decreased by -5.87% in the past year.
ERCG shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 1.76% yearly.
EPS 1Y (TTM)-60.46%
EPS 3Y-38.27%
EPS 5Y-17.01%
EPS Q2Q%22.54%
Revenue 1Y (TTM)-5.87%
Revenue growth 3Y2.19%
Revenue growth 5Y1.76%
Sales Q2Q%1.44%
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.
The Revenue is expected to grow by 4.46% on average over the next years.
EPS Next Y292.93%
EPS Next 2Y100.23%
EPS Next 3Y66.47%
EPS Next 5Y45.47%
Revenue Next Year3.62%
Revenue Next 2Y3.08%
Revenue Next 3Y1.98%
Revenue Next 5Y4.46%
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.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
The Price/Earnings ratio is 52.47, which means the current valuation is very expensive for ERCG.
Based on the Price/Earnings ratio, ERCG is valued a bit cheaper than the industry average as 66.67% of the companies are valued more expensively.
ERCG's Price/Earnings ratio indicates a rather expensive valuation when compared to the S&P500 average which is at 29.35.
A Price/Forward Earnings ratio of 13.09 indicates a correct valuation of ERCG.
ERCG's Price/Forward Earnings ratio is rather cheap when compared to the industry. ERCG is cheaper than 91.67% of the companies in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 22.10, ERCG is valued a bit cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 52.47 | ||
| Fwd PE | 13.09 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, ERCG is valued a bit cheaper than the industry average as 70.83% of the companies are valued more expensively.
Based on the Price/Free Cash Flow ratio, ERCG is valued cheaply inside the industry as 87.50% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 7.45 | ||
| EV/EBITDA | 8.67 |
4.3 Compensation for Growth
The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
ERCG's earnings are expected to grow with 66.47% in the coming years. This may justify a more expensive valuation.
PEG (NY)0.18
PEG (5Y)N/A
EPS Next 2Y100.23%
EPS Next 3Y66.47%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 3.20%, ERCG has a reasonable but not impressive dividend return.
ERCG's Dividend Yield is rather good when compared to the industry average which is at 3.51. ERCG pays more dividend than 91.67% of the companies in the same industry.
ERCG's Dividend Yield is a higher than the S&P500 average which is at 2.33.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.2% |
5.2 History
On average, the dividend of ERCG grows each year by 21.64%, which is quite nice.
Dividend Growth(5Y)21.64%
Div Incr Years4
Div Non Decr Years5
5.3 Sustainability
The earnings of ERCG are negative and hence is the payout ratio. ERCG will probably not be able to sustain this dividend level.
The dividend of ERCG is growing, but earnings are growing more, so the dividend growth is sustainable.
DP-667.4%
EPS Next 2Y100.23%
EPS Next 3Y66.47%
FRA:ERCG (3/5/2025, 7:00:00 PM)
7.87
-0.15 (-1.87%)
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 Cap26.23B
Analysts55.86
Price Target7.79 (-1.02%)
Short Float %N/A
Short RatioN/A
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.2% |
Yearly Dividend0.24
Dividend Growth(5Y)21.64%
DP-667.4%
Div Incr Years4
Div Non Decr Years5
Ex-DateN/A
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)-284.38%
Min EPS beat(2)-588.91%
Max EPS beat(2)20.16%
EPS beat(4)3
Avg EPS beat(4)-94.09%
Min EPS beat(4)-588.91%
Max EPS beat(4)160.39%
EPS beat(8)6
Avg EPS beat(8)-34.73%
EPS beat(12)7
Avg EPS beat(12)-23.13%
EPS beat(16)9
Avg EPS beat(16)-15.73%
Revenue beat(2)1
Avg Revenue beat(2)0.49%
Min Revenue beat(2)-0.69%
Max Revenue beat(2)1.67%
Revenue beat(4)1
Avg Revenue beat(4)-2.16%
Min Revenue beat(4)-7.15%
Max Revenue beat(4)1.67%
Revenue beat(8)3
Avg Revenue beat(8)-1.03%
Revenue beat(12)7
Avg Revenue beat(12)-0.09%
Revenue beat(16)8
Avg Revenue beat(16)-1.07%
PT rev (1m)0%
PT rev (3m)17.17%
EPS NQ rev (1m)-1.85%
EPS NQ rev (3m)-1.85%
EPS NY rev (1m)4.29%
EPS NY rev (3m)4.29%
Revenue NQ rev (1m)0.32%
Revenue NQ rev (3m)0.32%
Revenue NY rev (1m)0.15%
Revenue NY rev (3m)0.29%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 52.47 | ||
| Fwd PE | 13.09 | ||
| P/S | 1.19 | ||
| P/FCF | 7.45 | ||
| P/OCF | 6.77 | ||
| P/B | 3.38 | ||
| P/tB | 13.28 | ||
| EV/EBITDA | 8.67 |
EPS(TTM)0.15
EY1.91%
EPS(NY)0.6
Fwd EY7.64%
FCF(TTM)1.06
FCFY13.43%
OCF(TTM)1.16
OCFY14.77%
SpS6.64
BVpS2.33
TBVpS0.59
PEG (NY)0.18
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | -0.5% | ||
| ROE | -1.58% | ||
| ROCE | 13.12% | ||
| ROIC | 9.24% | ||
| ROICexc | 13.36% | ||
| ROICexgc | 34.12% | ||
| OM | 8.16% | ||
| PM (TTM) | N/A | ||
| GM | 43.44% | ||
| FCFM | 15.92% |
ROA(3y)N/A
ROA(5y)N/A
ROE(3y)N/A
ROE(5y)N/A
ROIC(3y)N/A
ROIC(5y)N/A
ROICexc(3y)N/A
ROICexc(5y)N/A
ROICexgc(3y)N/A
ROICexgc(5y)N/A
ROCE(3y)N/A
ROCE(5y)N/A
ROICexcg growth 3YN/A
ROICexcg growth 5YN/A
ROICexc growth 3YN/A
ROICexc growth 5YN/A
OM growth 3Y-36.4%
OM growth 5Y-5.54%
PM growth 3Y-90.62%
PM growth 5Y-61.69%
GM growth 3Y1.11%
GM growth 5Y3.7%
F-Score4
Asset Turnover0.91
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.44 | ||
| Debt/FCF | 1.11 | ||
| Debt/EBITDA | 1.23 | ||
| Cap/Depr | 36.02% | ||
| Cap/Sales | 1.59% | ||
| Interest Coverage | 6.62 | ||
| Cash Conversion | 139.28% | ||
| Profit Quality | N/A | ||
| Current Ratio | 1.19 | ||
| Quick Ratio | 0.95 | ||
| Altman-Z | N/A |
F-Score4
WACC7.04%
ROIC/WACC1.31
Cap/Depr(3y)39.65%
Cap/Depr(5y)46.92%
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)-60.46%
EPS 3Y-38.27%
EPS 5Y-17.01%
EPS Q2Q%22.54%
EPS Next Y292.93%
EPS Next 2Y100.23%
EPS Next 3Y66.47%
EPS Next 5Y45.47%
Revenue 1Y (TTM)-5.87%
Revenue growth 3Y2.19%
Revenue growth 5Y1.76%
Sales Q2Q%1.44%
Revenue Next Year3.62%
Revenue Next 2Y3.08%
Revenue Next 3Y1.98%
Revenue Next 5Y4.46%
EBIT growth 1Y-13.58%
EBIT growth 3Y-35.01%
EBIT growth 5Y-3.88%
EBIT Next Year79.02%
EBIT Next 3Y30.29%
EBIT Next 5Y16.92%
FCF growth 1Y536.89%
FCF growth 3Y7.36%
FCF growth 5Y33.08%
OCF growth 1Y243.37%
OCF growth 3Y5.8%
OCF growth 5Y22.35%