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. While ERCG has a great profitability rating, there are some minor concerns on its financial health. ERCG is cheap, but on the other hand it scores bad on growth.
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.
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
The Return On Assets of ERCG (0.58%) is better than 64.00% of its industry peers.
With a decent Return On Equity value of 1.87%, ERCG is doing good in the industry, outperforming 64.00% of the companies in the same industry.
Looking at the Return On Invested Capital, with a value of 12.87%, ERCG belongs to the top of the industry, outperforming 92.00% 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 9.99%.
The last Return On Invested Capital (12.87%) for ERCG is above the 3 year average (9.43%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 0.58% | ||
| ROE | 1.87% | ||
| ROIC | 12.87% |
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 0.65% is fine compared to the rest of the industry. ERCG outperforms 64.00% of its industry peers.
In the last couple of years the Profit Margin of ERCG has declined.
With an excellent Operating Margin value of 10.72%, ERCG belongs to the best of the industry, outperforming 84.00% of the companies in the same industry.
In the last couple of years the Operating Margin of ERCG has grown nicely.
ERCG's Gross Margin of 46.21% is in line compared to the rest of the industry. ERCG outperforms 60.00% of its industry peers.
In the last couple of years the Gross Margin of ERCG has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 10.72% | ||
| PM (TTM) | 0.65% | ||
| GM | 46.21% |
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.
The number of shares outstanding for ERCG has been increased compared to 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 1.02, which is an excellent value as it means it would take ERCG, only 1.02 years of fcf income to pay off all of its debts.
ERCG's Debt to FCF ratio of 1.02 is amongst the best of the industry. ERCG outperforms 88.00% of its industry peers.
A Debt/Equity ratio of 0.41 indicates that ERCG is not too dependend on debt financing.
Looking at the Debt to Equity ratio, with a value of 0.41, ERCG is in line with its industry, outperforming 56.00% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.41 | ||
| Debt/FCF | 1.02 | ||
| Altman-Z | N/A |
ROIC/WACC2.3
WACC5.6%
2.3 Liquidity
A Current Ratio of 1.09 indicates that ERCG should not have too much problems paying its short term obligations.
The Current ratio of ERCG (1.09) is worse than 80.00% of its industry peers.
ERCG has a Quick Ratio of 1.09. 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 worse Quick ratio (0.88) than 68.00% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.09 | ||
| Quick Ratio | 0.88 |
3. Growth
3.1 Past
The earnings per share for ERCG have decreased strongly by -46.92% 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.
ERCG shows a decrease in Revenue. In the last year, the revenue decreased by -1.79%.
Measured over the past years, ERCG shows a small growth in Revenue. The Revenue has been growing by 1.76% on average per year.
EPS 1Y (TTM)-46.92%
EPS 3Y-38.27%
EPS 5Y-17.01%
EPS Q2Q%60.24%
Revenue 1Y (TTM)-1.79%
Revenue growth 3Y2.19%
Revenue growth 5Y1.76%
Sales Q2Q%3.19%
3.2 Future
The Earnings Per Share is expected to grow by 29.89% on average over the next years. This is a very strong growth
The Revenue is expected to grow by 0.40% on average over the next years.
EPS Next Y267.53%
EPS Next 2Y93.12%
EPS Next 3Y58.42%
EPS Next 5Y29.89%
Revenue Next Year0.35%
Revenue Next 2Y0.68%
Revenue Next 3Y1.13%
Revenue Next 5Y0.4%
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 35.00, ERCG can be considered very expensive at the moment.
Based on the Price/Earnings ratio, ERCG is valued a bit cheaper than the industry average as 72.00% of the companies are valued more expensively.
When comparing the Price/Earnings ratio of ERCG to the average of the S&P500 Index (27.30), we can say ERCG is valued slightly more expensively.
ERCG is valuated correctly with a Price/Forward Earnings ratio of 12.36.
Compared to the rest of the industry, the Price/Forward Earnings ratio of ERCG indicates a rather cheap valuation: ERCG is cheaper than 84.00% of the companies listed in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 21.76, ERCG is valued a bit cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 35 | ||
| Fwd PE | 12.36 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, ERCG is valued cheaply inside the industry as 92.00% of the companies are valued more expensively.
88.00% 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 | 6.3 | ||
| EV/EBITDA | 6.7 |
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 a very decent profitability rating, which may justify a higher PE ratio.
ERCG's earnings are expected to grow with 58.42% in the coming years. This may justify a more expensive valuation.
PEG (NY)0.13
PEG (5Y)N/A
EPS Next 2Y93.12%
EPS Next 3Y58.42%
5. Dividend
5.1 Amount
ERCG has a Yearly Dividend Yield of 3.47%.
Compared to an average industry Dividend Yield of 5.67, ERCG pays a better dividend. On top of this ERCG pays more dividend than 92.00% of the companies listed in the same industry.
ERCG's Dividend Yield is a higher than the S&P500 average which is at 2.37.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.47% |
5.2 History
On average, the dividend of ERCG grows each year by 22.02%, which is quite nice.
Dividend Growth(5Y)22.02%
Div Incr Years1
Div Non Decr Years6
5.3 Sustainability
573.48% of the earnings are spent on dividend by ERCG. This is not a sustainable payout ratio.
ERCG's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP573.48%
EPS Next 2Y93.12%
EPS Next 3Y58.42%
FRA:ERCG (6/23/2025, 7:00:00 PM)
7
-1.04 (-12.94%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupTechnology Hardware & Equipment
GICS IndustryCommunications Equipment
Earnings (Last)
Earnings (Next)
Inst Owners46.79%
Inst Owner ChangeN/A
Ins Owners0.07%
Ins Owner ChangeN/A
Market Cap23.33B
Analysts56.55
Price Target8.19 (17%)
Short Float %N/A
Short RatioN/A
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.47% |
Yearly Dividend0.24
Dividend Growth(5Y)22.02%
DP573.48%
Div Incr Years1
Div Non Decr Years6
Ex-DateN/A
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)19.55%
Min EPS beat(2)-10.72%
Max EPS beat(2)49.81%
EPS beat(4)2
Avg EPS beat(4)-132.41%
Min EPS beat(4)-588.91%
Max EPS beat(4)49.81%
EPS beat(8)6
Avg EPS beat(8)-35.54%
EPS beat(12)7
Avg EPS beat(12)-21.49%
EPS beat(16)9
Avg EPS beat(16)-14.64%
Revenue beat(2)0
Avg Revenue beat(2)-1.28%
Min Revenue beat(2)-2.1%
Max Revenue beat(2)-0.45%
Revenue beat(4)1
Avg Revenue beat(4)-0.39%
Min Revenue beat(4)-2.1%
Max Revenue beat(4)1.67%
Revenue beat(8)1
Avg Revenue beat(8)-1.78%
Revenue beat(12)5
Avg Revenue beat(12)-0.75%
Revenue beat(16)7
Avg Revenue beat(16)-0.79%
PT rev (1m)5.23%
PT rev (3m)5.23%
EPS NQ rev (1m)0.21%
EPS NQ rev (3m)30.66%
EPS NY rev (1m)0%
EPS NY rev (3m)-4.37%
Revenue NQ rev (1m)-0.41%
Revenue NQ rev (3m)-3.19%
Revenue NY rev (1m)0%
Revenue NY rev (3m)-3%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 35 | ||
| Fwd PE | 12.36 | ||
| P/S | 1.05 | ||
| P/FCF | 6.3 | ||
| P/OCF | 5.76 | ||
| P/B | 3.05 | ||
| P/tB | 11.34 | ||
| EV/EBITDA | 6.7 |
EPS(TTM)0.2
EY2.86%
EPS(NY)0.57
Fwd EY8.09%
FCF(TTM)1.11
FCFY15.88%
OCF(TTM)1.21
OCFY17.35%
SpS6.66
BVpS2.29
TBVpS0.62
PEG (NY)0.13
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 0.58% | ||
| ROE | 1.87% | ||
| ROCE | 18.28% | ||
| ROIC | 12.87% | ||
| ROICexc | 19.49% | ||
| ROICexgc | 55.79% | ||
| OM | 10.72% | ||
| PM (TTM) | 0.65% | ||
| GM | 46.21% | ||
| FCFM | 16.7% |
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%
ROICexcg growth 3Y9.12%
ROICexcg 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-Score7
Asset Turnover0.9
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.41 | ||
| Debt/FCF | 1.02 | ||
| Debt/EBITDA | 0.94 | ||
| Cap/Depr | 36.59% | ||
| Cap/Sales | 1.55% | ||
| Interest Coverage | 10.63 | ||
| Cash Conversion | 122.12% | ||
| Profit Quality | 2589.32% | ||
| Current Ratio | 1.09 | ||
| Quick Ratio | 0.88 | ||
| Altman-Z | N/A |
F-Score7
WACC5.6%
ROIC/WACC2.3
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)-46.92%
EPS 3Y-38.27%
EPS 5Y-17.01%
EPS Q2Q%60.24%
EPS Next Y267.53%
EPS Next 2Y93.12%
EPS Next 3Y58.42%
EPS Next 5Y29.89%
Revenue 1Y (TTM)-1.79%
Revenue growth 3Y2.19%
Revenue growth 5Y1.76%
Sales Q2Q%3.19%
Revenue Next Year0.35%
Revenue Next 2Y0.68%
Revenue Next 3Y1.13%
Revenue Next 5Y0.4%
EBIT growth 1Y48.21%
EBIT growth 3Y-10.75%
EBIT growth 5Y16.26%
EBIT Next Year84.47%
EBIT Next 3Y23.21%
EBIT Next 5Y11.76%
FCF growth 1Y126.71%
FCF growth 3Y7.36%
FCF growth 5Y33.08%
OCF growth 1Y82.12%
OCF growth 3Y5.8%
OCF growth 5Y22.35%