ERICSSON LM-A SHS (ERCG.DE) Stock Fundamental Analysis
Europe - Frankfurt Stock Exchange - FRA:ERCG - SE0000108649 - Common Stock
8.19 EUR
-0.2 (-2.38%)
ERCG gets a fundamental rating of 6 out of 10. The analysis compared the fundamentals against 31 industry peers in the Communications Equipment industry. While ERCG has a great profitability rating, there are some minor concerns on its financial health. A decent growth rate in combination with a cheap valuation! Better keep an eye on ERCG. Finally 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.
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
Looking at the Return On Assets, with a value of 8.72%, ERCG belongs to the top of the industry, outperforming 83.87% of the companies in the same industry.
ERCG's Return On Equity of 24.01% is amongst the best of the industry. ERCG outperforms 90.32% of its industry peers.
ERCG has a Return On Invested Capital of 13.55%. This is amongst the best in the industry. ERCG outperforms 83.87% of its industry peers.
ERCG had an Average Return On Invested Capital over the past 3 years of 9.43%. This is in line with the industry average of 11.02%.
The last Return On Invested Capital (13.55%) for ERCG is above the 3 year average (9.43%), which is a sign of increasing profitability.
| 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's Profit Margin of 10.26% is amongst the best of the industry. ERCG outperforms 80.65% of its industry peers.
ERCG's Profit Margin has declined in the last couple of years.
ERCG's Operating Margin of 12.97% is fine compared to the rest of the industry. ERCG outperforms 77.42% of its industry peers.
In the last couple of years the Operating Margin of ERCG has grown nicely.
Looking at the Gross Margin, with a value of 47.62%, ERCG is in line with its industry, outperforming 58.06% of the companies in the same industry.
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
With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), ERCG is creating value.
The number of shares outstanding for ERCG remains at a similar level compared to 1 year ago.
ERCG has more shares outstanding than it did 5 years ago.
Compared to 1 year ago, ERCG has an improved debt to assets ratio.
2.2 Solvency
The Debt to FCF ratio of ERCG is 1.45, which is an excellent value as it means it would take ERCG, only 1.45 years of fcf income to pay off all of its debts.
The Debt to FCF ratio of ERCG (1.45) is better than 83.87% of its industry peers.
A Debt/Equity ratio of 0.35 indicates that ERCG is not too dependend on debt financing.
The Debt to Equity ratio of ERCG (0.35) is comparable to the rest of the industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.35 | ||
| Debt/FCF | 1.45 | ||
| Altman-Z | N/A |
ROIC/WACC1.97
WACC6.86%
2.3 Liquidity
A Current Ratio of 1.17 indicates that ERCG should not have too much problems paying its short term obligations.
Looking at the Current ratio, with a value of 1.17, ERCG is doing worse than 74.19% of the companies in the same industry.
A Quick Ratio of 0.94 indicates that ERCG may have some problems paying its short term obligations.
The Quick ratio of ERCG (0.94) is worse than 67.74% of its industry peers.
| 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 541.12% over the past 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.
ERCG shows a decrease in Revenue. In the last year, the revenue decreased by -2.65%.
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
The Earnings Per Share is expected to grow by 30.35% on average over the next years. This is a very strong growth
Based on estimates for the next years, ERCG will show a decrease in Revenue. The Revenue will decrease by -0.85% on average per year.
EPS Next Y352.29%
EPS Next 2Y97.18%
EPS Next 3Y58.79%
EPS Next 5Y30.35%
Revenue Next Year-5.09%
Revenue Next 2Y-2.77%
Revenue Next 3Y-1.19%
Revenue Next 5Y-0.85%
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 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 10.50, the valuation of ERCG can be described as very reasonable.
93.55% of the companies in the same industry are more expensive than ERCG, based on the Price/Earnings ratio.
ERCG is valuated cheaply when we compare the Price/Earnings ratio to 27.19, which is the current average of the S&P500 Index.
With a Price/Forward Earnings ratio of 13.28, ERCG is valued correctly.
Compared to the rest of the industry, the Price/Forward Earnings ratio of ERCG indicates a rather cheap valuation: ERCG is cheaper than 83.87% of the companies listed in the same industry.
ERCG's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 23.88.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 10.5 | ||
| Fwd PE | 13.28 |
4.2 Price Multiples
87.10% of the companies in the same industry are more expensive than ERCG, based on the Enterprise Value to EBITDA ratio.
74.19% 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 | 9.67 | ||
| EV/EBITDA | 7 |
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 has an outstanding profitability rating, which may justify a higher PE ratio.
A more expensive valuation may be justified as ERCG's earnings are expected to grow with 58.79% in the coming years.
PEG (NY)0.03
PEG (5Y)N/A
EPS Next 2Y97.18%
EPS Next 3Y58.79%
5. Dividend
5.1 Amount
ERCG has a Yearly Dividend Yield of 3.27%.
Compared to an average industry Dividend Yield of 2.73, 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 1.90.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.27% |
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.
The dividend of ERCG is growing, but earnings are growing more, so the dividend growth is sustainable.
DP37.84%
EPS Next 2Y97.18%
EPS Next 3Y58.79%
FRA:ERCG (1/9/2026, 7:00:00 PM)
8.19
-0.2 (-2.38%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupTechnology Hardware & Equipment
GICS IndustryCommunications Equipment
Earnings (Last)
Earnings (Next)
Inst Owners56.85%
Inst Owner ChangeN/A
Ins Owners0.07%
Ins Owner ChangeN/A
Market Cap27.30B
Revenue(TTM)240.31B
Net Income(TTM)24.64B
Analysts56.43
Price Target8.11 (-0.98%)
Short Float %N/A
Short RatioN/A
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.27% |
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)1.95%
PT rev (3m)11.53%
EPS NQ rev (1m)-2.91%
EPS NQ rev (3m)10.76%
EPS NY rev (1m)-0.21%
EPS NY rev (3m)21.62%
Revenue NQ rev (1m)-0.14%
Revenue NQ rev (3m)-1.34%
Revenue NY rev (1m)-0.02%
Revenue NY rev (3m)-1.59%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 10.5 | ||
| Fwd PE | 13.28 | ||
| P/S | 1.22 | ||
| P/FCF | 9.67 | ||
| P/OCF | 8.65 | ||
| P/B | 2.86 | ||
| P/tB | 6.55 | ||
| EV/EBITDA | 7 |
EPS(TTM)0.78
EY9.52%
EPS(NY)0.62
Fwd EY7.53%
FCF(TTM)0.85
FCFY10.34%
OCF(TTM)0.95
OCFY11.55%
SpS6.7
BVpS2.86
TBVpS1.25
PEG (NY)0.03
PEG (5Y)N/A
Graham Number7.09
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
WACC6.86%
ROIC/WACC1.97
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 Y352.29%
EPS Next 2Y97.18%
EPS Next 3Y58.79%
EPS Next 5Y30.35%
Revenue 1Y (TTM)-2.65%
Revenue growth 3Y2.19%
Revenue growth 5Y1.76%
Sales Q2Q%-8.99%
Revenue Next Year-5.09%
Revenue Next 2Y-2.77%
Revenue Next 3Y-1.19%
Revenue Next 5Y-0.85%
EBIT growth 1Y54.66%
EBIT growth 3Y-10.75%
EBIT growth 5Y16.26%
EBIT Next Year112.01%
EBIT Next 3Y21.84%
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
Can you provide the ChartMill fundamental rating for ERICSSON LM-A SHS?
ChartMill assigns a fundamental rating of 6 / 10 to ERCG.DE.
What is the valuation status of ERICSSON LM-A SHS (ERCG.DE) stock?
ChartMill assigns a valuation rating of 8 / 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 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 10.5 and the Price/Book (PB) ratio is 2.86.
How financially healthy is ERICSSON LM-A SHS?
The financial health rating of ERICSSON LM-A SHS (ERCG.DE) is 4 / 10.