ERICSSON LM-A SHS (ERCG.DE) Stock Fundamental Analysis
Europe - Frankfurt Stock Exchange - FRA:ERCG - SE0000108649 - Common Stock
8.36 EUR
+0.17 (+2.08%)
Taking everything into account, ERCG scores 6 out of 10 in our fundamental rating. ERCG was compared to 32 industry peers in the Communications Equipment industry. While ERCG has a great profitability rating, there are some minor concerns on its financial health. ERCG may be a bit undervalued, certainly considering the very reasonable score on growth Finally 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.
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
The Return On Assets of ERCG (8.72%) is better than 84.38% of its industry peers.
The Return On Equity of ERCG (24.01%) is better than 90.63% of its industry peers.
Looking at the Return On Invested Capital, with a value of 13.55%, ERCG belongs to the top of the industry, outperforming 84.38% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for ERCG is below the industry average of 11.49%.
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's Profit Margin of 10.26% is amongst the best of the industry. ERCG outperforms 81.25% 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 is in the better half of the industry, outperforming 78.13% of the companies in the same industry.
In the last couple of years the Operating Margin of ERCG has grown nicely.
With a Gross Margin value of 47.62%, ERCG perfoms like the industry average, outperforming 59.38% 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 | 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) just above the Cost of Capital (WACC), ERCG is creating some value.
The number of shares outstanding for ERCG remains at a similar level compared to 1 year ago.
The number of shares outstanding for ERCG has been increased compared to 5 years ago.
ERCG has a better debt/assets ratio than last year.
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.
ERCG's Debt to FCF ratio of 1.45 is fine compared to the rest of the industry. ERCG outperforms 78.13% of its industry peers.
ERCG has a Debt/Equity ratio of 0.35. This is a healthy value indicating a solid balance between debt and equity.
ERCG has a Debt to Equity ratio (0.35) which is in line with its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.35 | ||
| Debt/FCF | 1.45 | ||
| Altman-Z | N/A |
ROIC/WACC1.78
WACC7.61%
2.3 Liquidity
A Current Ratio of 1.17 indicates that ERCG should not have too much problems paying 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 75.00% of its industry peers.
ERCG has a Quick Ratio of 1.17. This is a bad value and indicates that ERCG is not financially healthy enough and could expect problems in meeting its short term obligations.
ERCG's Quick ratio of 0.94 is on the low side compared to the rest of the industry. ERCG is outperformed by 68.75% of its industry peers.
| 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
ERCG shows a decrease in Revenue. In the last year, the revenue decreased by -2.65%.
ERCG shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 1.76% yearly.
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 29.52% yearly.
The Revenue is expected to decrease by -1.48% on average over the next years.
EPS Next Y352.29%
EPS Next 2Y97.18%
EPS Next 3Y58.79%
EPS Next 5Y29.52%
Revenue Next Year-5.09%
Revenue Next 2Y-2.77%
Revenue Next 3Y-1.19%
Revenue Next 5Y-1.47%
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.
When comparing the Revenue 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
ERCG is valuated reasonably with a Price/Earnings ratio of 10.58.
Based on the Price/Earnings ratio, ERCG is valued cheaper than 93.75% of the companies in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 27.25, ERCG is valued rather cheaply.
ERCG is valuated correctly with a Price/Forward Earnings ratio of 13.47.
ERCG's Price/Forward Earnings ratio is rather cheap when compared to the industry. ERCG is cheaper than 84.38% of the companies in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 23.98, ERCG is valued a bit cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 10.58 | ||
| Fwd PE | 13.47 |
4.2 Price Multiples
ERCG's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. ERCG is cheaper than 90.63% of the companies in the same industry.
81.25% 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 | 9.81 | ||
| EV/EBITDA | 6.93 |
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.
The decent profitability rating of ERCG may justify a higher PE ratio.
ERCG's earnings are expected to grow with 58.79% in the coming years. This may justify a more expensive valuation.
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%. Purely for dividend investing, there may be better candidates out there.
ERCG's Dividend Yield is rather good when compared to the industry average which is at 2.52. ERCG pays more dividend than 90.63% of the companies in the same industry.
ERCG's Dividend Yield is rather good when compared to the S&P500 average which is at 1.92.
| 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 (1/12/2026, 7:00:00 PM)
8.36
+0.17 (+2.08%)
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 Cap27.87B
Revenue(TTM)240.31B
Net Income(TTM)24.64B
Analysts56.43
Price Target8.11 (-2.99%)
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)1.54%
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 | 10.58 | ||
| Fwd PE | 13.47 | ||
| P/S | 1.24 | ||
| P/FCF | 9.81 | ||
| P/OCF | 8.78 | ||
| P/B | 2.9 | ||
| P/tB | 6.65 | ||
| EV/EBITDA | 6.93 |
EPS(TTM)0.79
EY9.45%
EPS(NY)0.62
Fwd EY7.42%
FCF(TTM)0.85
FCFY10.2%
OCF(TTM)0.95
OCFY11.39%
SpS6.74
BVpS2.88
TBVpS1.26
PEG (NY)0.03
PEG (5Y)N/A
Graham Number7.15
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
WACC7.61%
ROIC/WACC1.78
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 5Y29.52%
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-1.47%
EBIT growth 1Y54.66%
EBIT growth 3Y-10.75%
EBIT growth 5Y16.26%
EBIT Next Year112.01%
EBIT Next 3Y21.84%
EBIT Next 5Y14.41%
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 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 10.58 and the Price/Book (PB) ratio is 2.9.
How financially healthy is ERICSSON LM-A SHS?
The financial health rating of ERICSSON LM-A SHS (ERCG.DE) is 4 / 10.