Telefonaktiebolaget LM Ericsson (ERIC) AI Stock Analysis

• Market Cap: $23.07B
• Dividend Yield: 2.39%
• Average Volume (3M): 25.67M
• Price to Earnings (P/E): 12050.0
• Beta (1Y): 0.82
• Revenue Growth: -5.59%
• EPS Growth: N/A
• Country: US
• Employees: 93,897
• Sector: Technology
• Sector Strength: 40
• Industry: Communication Equipment
• EPS (TTM): <0.01
• Shares Outstanding: 3,086,495,800
• 10 Day Avg. Volume: 28,860,342
• 30 Day Avg. Volume: 25,673,549
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 1.04
• Price to Cash Flow (P/CF): N/A
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $7.14
• Price Target Upside: 0.42% Upside
• Rating Consensus: Moderate Sell
• Number of Analyst Covering: 2

Ericsson's overall score reflects a stable financial position with strengths in cash flow and recent profitability improvements. The technical analysis suggests moderate positive momentum, although valuation concerns are highlighted by a high P/E ratio. The earnings call provided strong performance insights, particularly in North America, but also noted challenges in other markets. These mixed factors yield a balanced overall score.

Telefonaktiebolaget LM Ericsson Business Overview & Revenue Model

Company Description

Telefonaktiebolaget LM Ericsson (publ), together with its subsidiaries, provides communication infrastructure, services, and software solutions to the telecom and other sectors. It operates through four segments: Networks, Digital Services, Managed Services, and Emerging Business and Other. The Networks segment offers radio access network solutions for various network spectrum bands, including integrated high-performing hardware and software. This segment also provides integrated antenna and transport solutions; and a range of service portfolio covering network deployment and support. The Digital Services segment offers software-based solutions for business support systems, operational support systems, communication services, core networks, and cloud infrastructure. The Managed Services segment provides networks and IT managed, network design and optimization, and application development and maintenance services to telecom operators. The Emerging Business and Other segment includes emerging businesses comprising Internet of Things; iconectiv; Cradlepoint that offers wireless edge WAN 4G and 5G enterprise solutions; and Red Bee Media, MediaKind, and other new businesses. It operates in North America, Europe and Latin America, the Middle East and Africa, South East Asia, Oceania, India, North East Asia, and internationally. Telefonaktiebolaget LM Ericsson (publ) was founded in 1876 and is headquartered in Stockholm, Sweden.

How the Company Makes Money

Ericsson generates revenue through multiple streams, primarily from selling and licensing telecommunications equipment and software to network operators worldwide. The company's networks segment, which includes offerings like radio access networks and transport solutions, is a significant contributor to its earnings. Additionally, Ericsson's digital services segment provides software and services that help operators modernize and manage their networks, further driving revenue. The managed services unit offers outsourcing solutions, including network operation and optimization, which also contribute to the company's income. Partnerships with major telecom operators and ongoing investments in research and development to innovate and expand its product portfolio are critical factors supporting Ericsson's revenue generation.

Telefonaktiebolaget LM Ericsson Financial Statement Overview

Summary

Telefonaktiebolaget LM Ericsson demonstrates a stable financial position with strong cash flow management. While revenue growth has been inconsistent, recent improvements in profitability margins and cash flow efficiency are positive indicators. The balance sheet remains sound with moderate leverage, though returns on equity are currently low, highlighting an area for potential improvement.

Income Statement

Gross and net profit margins have shown fluctuations with recent improvements in gross profit margin, now at 44.1%, despite a decrease in revenue. The net profit margin for the latest year is positive at 0.008%, a recovery from the previous year's negative margin. Revenue growth has been inconsistent, with a decline in the most recent period. While EBIT margin is currently zero, the EBITDA margin is 6.52%, indicating some operational efficiency.

Balance Sheet

The debt-to-equity ratio is 0.48, indicating a moderate level of leverage. The equity ratio stands at 32.24%, reflecting a stable capital structure. ROE is low at 0.02%, pointing to limited returns on equity. Overall, the balance sheet shows a sound financial position with manageable debt levels.

Cash Flow

Free cash flow growth is strong, with significant positive cash flow reflecting robust operational efficiency. The operating cash flow to net income ratio is high, underscoring efficient cash generation. The free cash flow to net income ratio is very favorable, indicating strong cash conversion from earnings.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
247.88B	263.35B	271.55B	232.31B	232.39B
	Gross Profit
109.36B	101.60B	113.30B	100.75B	93.72B
	EBIT
0.00	11.98B	27.08B	31.78B	27.81B
	EBITDA
16.16B	27.96B	36.55B	38.92B	36.81B
	Net Income Common Stockholders
20.00M	-26.45B	18.72B	22.69B	17.48B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
60.76B	44.77B	47.09B	66.98B	50.43B
	Total Assets
292.37B	297.04B	349.54B	305.61B	271.53B
	Total Debt
45.54B	54.33B	42.23B	41.13B	39.46B
	Net Debt
1.65B	19.14B	3.88B	-12.92B	-4.15B
	Total Liabilities
199.39B	199.63B	216.23B	198.51B	186.35B
	Stockholders Equity
94.28B	98.67B	134.81B	108.78B	86.67B
Cash Flow		Free Cash Flow
42.62B	3.88B	24.67B	34.44B	23.62B
	Operating Cash Flow
46.26B	7.18B	30.86B	39.06B	28.93B
	Investing Cash Flow
-15.95B	-8.71B	-34.40B	-19.88B	-15.20B
	Financing Cash Flow
-23.86B	1.01B	-15.93B	-9.31B	-12.49B

Telefonaktiebolaget LM Ericsson Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 7.11
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ERIC, the sentiment is Negative. The current price of 7.11 is below the 20-day moving average (MA) of 7.73, below the 50-day MA of 7.83, and below the 200-day MA of 7.57, indicating a bearish trend. The MACD of -0.05 indicates Positive momentum. The RSI at 41.53 is Neutral, neither overbought nor oversold. The STOCH value of 13.75 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ERIC.

Telefonaktiebolaget LM Ericsson Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CSCO	75 Outperform	$231.26B	25.47	20.02%	2.75%	-5.34%	-30.57%
NOK	75 Outperform	$25.23B	20.00	8.27%	2.04%	-12.68%	90.73%
MSI	73 Outperform	$69.66B	45.18	129.87%	0.99%	8.41%	-7.83%
ERIC	73 Outperform	$23.07B	12,050.00	0.15%	2.39%	-5.59%	―
HPE	67 Neutral	$19.05B	7.17	12.09%	3.59%	10.93%	43.19%
JNPR	60 Neutral	$11.71B	40.85	6.21%	2.50%	-8.82%	-10.01%
Sector *	57 Neutral	$20.24B	9.51	-13.28%	2.72%	5.43%	-24.54%