ERICSSON LM-A SHS (ERCG.DE) Stock Fundamental Analysis
Europe - FRA:ERCG - SE0000108649 - Common Stock
9.04 EUR
+0.3 (+3.43%)
ERCG gets a fundamental rating of 6 out of 10. The analysis compared the fundamentals against 27 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. A decent growth rate in combination with a cheap valuation! Better keep an eye on ERCG. ERCG also has an excellent dividend rating.
1. Profitability
1.1 Basic Checks
ERCG had positive earnings in the past year.
ERCG had a positive operating cash flow in the past year.
ERCG had positive earnings in 4 of the past 5 years.
ERCG had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
ERCG's Return On Assets of 8.72% is amongst the best of the industry. ERCG outperforms 81.48% of its industry peers.
With an excellent Return On Equity value of 24.01%, ERCG belongs to the best of the industry, outperforming 85.19% 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 85.19% of the companies in the same industry.
Measured over the past 3 years, the Average Return On Invested Capital for ERCG is in line with the industry average of 10.70%.
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 has a Profit Margin of 10.26%. This is amongst the best in the industry. ERCG outperforms 81.48% 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 77.78% of its industry peers.
ERCG's Operating Margin has improved in the last couple of years.
Looking at the Gross Margin, with a value of 47.62%, ERCG is in line with its industry, outperforming 51.85% 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) 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.
The debt/assets ratio for ERCG has been reduced compared to a year ago.
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.
ERCG's Debt to FCF ratio of 1.45 is amongst the best of the industry. ERCG outperforms 81.48% 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.
Looking at the Debt to Equity ratio, with a value of 0.35, ERCG is in line with its industry, outperforming 55.56% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.35 | ||
| Debt/FCF | 1.45 | ||
| Altman-Z | N/A |
ROIC/WACC2.28
WACC5.93%
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 amonst the worse of the industry: ERCG underperforms 81.48% 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 has a Quick ratio of 0.94. This is in the lower half of the industry: ERCG underperforms 70.37% 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.
The earnings per share for ERCG have been decreasing by -17.01% on average. This is quite bad
The Revenue has decreased by -2.65% in the past 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
Based on estimates for the next years, ERCG will show a very strong growth in Earnings Per Share. The EPS will grow by 29.10% on average per year.
Based on estimates for the next years, ERCG will show a decrease in Revenue. The Revenue will decrease by -0.77% on average per year.
EPS Next Y271.88%
EPS Next 2Y89.39%
EPS Next 3Y55.91%
EPS Next 5Y29.1%
Revenue Next Year-3.55%
Revenue Next 2Y-1.45%
Revenue Next 3Y-0.62%
Revenue Next 5Y-0.77%
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
The Price/Earnings ratio is 11.74, which indicates a very decent valuation of ERCG.
Based on the Price/Earnings ratio, ERCG is valued cheaply inside the industry as 92.59% of the companies are valued more expensively.
When comparing the Price/Earnings ratio of ERCG to the average of the S&P500 Index (26.03), we can say ERCG is valued rather cheaply.
Based on the Price/Forward Earnings ratio of 16.14, 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 81.48% of the companies in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 22.27, ERCG is valued a bit cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 11.74 | ||
| Fwd PE | 16.14 |
4.2 Price Multiples
ERCG's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. ERCG is cheaper than 81.48% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, ERCG is valued a bit cheaper than the industry average as 70.37% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 10.84 | ||
| EV/EBITDA | 7.69 |
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 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 55.91% in the coming years.
PEG (NY)0.04
PEG (5Y)N/A
EPS Next 2Y89.39%
EPS Next 3Y55.91%
5. Dividend
5.1 Amount
ERCG has a Yearly Dividend Yield of 2.95%.
Compared to an average industry Dividend Yield of 5.15, ERCG pays a better dividend. On top of this ERCG pays more dividend than 88.89% of the companies listed in the same industry.
ERCG's Dividend Yield is a higher than the S&P500 average which is at 2.38.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.95% |
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
ERCG pays out 37.84% of its income as dividend. This is a sustainable payout ratio.
The dividend of ERCG is growing, but earnings are growing more, so the dividend growth is sustainable.
DP37.84%
EPS Next 2Y89.39%
EPS Next 3Y55.91%
FRA:ERCG (11/3/2025, 7:00:00 PM)
9.04
+0.3 (+3.43%)
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 Cap30.13B
Revenue(TTM)240.31B
Net Income(TTM)24.64B
Analysts56.43
Price Target7.96 (-11.95%)
Short Float %N/A
Short RatioN/A
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.95% |
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)9.48%
PT rev (3m)14.62%
EPS NQ rev (1m)14.08%
EPS NQ rev (3m)14.08%
EPS NY rev (1m)0%
EPS NY rev (3m)1.18%
Revenue NQ rev (1m)-0.17%
Revenue NQ rev (3m)-0.47%
Revenue NY rev (1m)0%
Revenue NY rev (3m)-0.31%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 11.74 | ||
| Fwd PE | 16.14 | ||
| P/S | 1.37 | ||
| P/FCF | 10.84 | ||
| P/OCF | 9.7 | ||
| P/B | 3.21 | ||
| P/tB | 7.35 | ||
| EV/EBITDA | 7.69 |
EPS(TTM)0.77
EY8.52%
EPS(NY)0.56
Fwd EY6.2%
FCF(TTM)0.83
FCFY9.23%
OCF(TTM)0.93
OCFY10.31%
SpS6.59
BVpS2.82
TBVpS1.23
PEG (NY)0.04
PEG (5Y)N/A
Graham Number6.99
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
WACC5.93%
ROIC/WACC2.28
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 Y271.88%
EPS Next 2Y89.39%
EPS Next 3Y55.91%
EPS Next 5Y29.1%
Revenue 1Y (TTM)-2.65%
Revenue growth 3Y2.19%
Revenue growth 5Y1.76%
Sales Q2Q%-8.99%
Revenue Next Year-3.55%
Revenue Next 2Y-1.45%
Revenue Next 3Y-0.62%
Revenue Next 5Y-0.77%
EBIT growth 1Y54.66%
EBIT growth 3Y-10.75%
EBIT growth 5Y16.26%
EBIT Next Year81.48%
EBIT Next 3Y20.93%
EBIT Next 5Y13.49%
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 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 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 271.88% 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%.