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Telefonaktiebolaget LM Ericsson Class B (ERIC)
NASDAQ:ERIC
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Telefonaktiebolaget LM Ericsson
(NASDAQ:ERIC)58Neutral
Telefonaktiebolaget LM Ericsson (ERIC) vs. S&P 500 (SPY)
Market Cap
$28.69B
Dividend Yield1.98%
Average Volume (3M)19.21M
Price to Earnings (P/E)14433.3
Beta (1Y)0.75
Revenue Growth-5.59%
EPS GrowthN/A
CountryUS
Employees99,952
SectorTechnology
Sector Strength48
IndustryHardware & Equipment
Share Statistics
EPS (TTM)<0.01
Shares Outstanding3,086,495,800
10 Day Avg. Volume23,937,088
30 Day Avg. Volume19,208,676
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)4.37
Price to Cash Flow (P/CF)N/A
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$7.01Price Target Upside-16.65% Downside
Rating ConsensusModerate Sell
Number of Analyst Covering2
Telefonaktiebolaget LM Ericsson Business Overview & Revenue Model
Company DescriptionTelefonaktiebolaget LM Ericsson, commonly known as Ericsson, is a leading provider of information and communication technology (ICT) to service providers. Founded in 1876 and headquartered in Stockholm, Sweden, Ericsson operates in the telecommunications equipment and services sector. The company is renowned for its innovative solutions in mobile and fixed network infrastructure, digital services, managed services, and emerging technologies like 5G and IoT.
How the Company Makes MoneyEricsson makes money primarily through the sale of telecommunications equipment and services to service providers worldwide. Its revenue model is centered around several key streams: networks, digital services, managed services, and emerging business areas. The Networks segment, which includes radio access networks and transport networks, is the largest contributor to Ericsson's revenue, driven by the global rollout of 5G technology. Digital services offer software and solutions for telecom operators to manage and monetize their networks, while Managed Services involve outsourcing network operations and maintenance for efficiency and cost savings. Ericsson also invests in strategic partnerships and collaborations with telecom operators and technology firms to enhance its product offerings and expand its market reach. These partnerships, along with Ericsson's focus on R&D and innovation, are significant factors contributing to its earnings.
Telefonaktiebolaget LM Ericsson Financial Statement Overview
Summary
Ericsson shows a mixed financial performance with strong cash flow and liquidity, but faces challenges with net income and rising debt levels. Management should focus on enhancing profitability while maintaining financial stability.Income Statement
Ericsson's TTM (Trailing-Twelve-Months) gross profit margin is robust, showing efficient cost management. However, the company faces challenges with a negative net income, indicating profitability issues. Revenue growth has been inconsistent, with a slight decline in recent years, impacting the overall financial health.55
Neutral
Balance Sheet
The balance sheet indicates a stable equity ratio, which suggests sound financial leverage. However, the debt-to-equity ratio has increased slightly, signaling rising debt levels relative to equity. This could pose risks if not managed properly.60
Neutral
Cash Flow
Ericsson's cash flow statement is strong, with significant free cash flow growth and a solid operating cash flow to net income ratio. Despite profitability challenges, the company maintains good liquidity, which is a positive indicator of its ability to sustain operations.70
Positive
| Breakdown | |||||
| TTM | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 | Dec 2019 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 246.85B | 263.35B | 271.55B | 232.31B | 232.39B | 227.22B | Gross Profit |
| 106.81B | 101.60B | 113.30B | 100.75B | 93.72B | 84.82B | EBIT |
| 16.26B | 11.98B | 27.08B | 31.78B | 27.81B | 10.56B | EBITDA |
| 43.67B | 27.96B | 36.55B | 38.92B | 36.81B | 19.13B | Net Income Common Stockholders |
| -1.36B | -26.45B | 18.72B | 22.69B | 17.48B | 2.22B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 45.01B | 44.77B | 47.09B | 66.98B | 50.43B | 51.84B | Total Assets |
| 268.76B | 297.04B | 349.54B | 305.61B | 271.53B | 276.38B | Total Debt |
| 33.13B | 54.33B | 42.23B | 41.13B | 39.46B | 47.58B | Net Debt |
| -5.26B | 19.14B | 3.88B | -12.92B | -4.15B | 2.50B | Total Liabilities |
| 180.99B | 199.63B | 216.23B | 198.51B | 186.35B | 194.50B | Stockholders Equity |
| 86.98B | 98.67B | 134.81B | 108.78B | 86.67B | 82.56B |
| Cash Flow | Free Cash Flow | ||||
| 40.19B | 3.88B | 24.67B | 34.44B | 23.62B | 10.21B | Operating Cash Flow |
| 43.23B | 7.18B | 30.86B | 39.06B | 28.93B | 16.87B | Investing Cash Flow |
| -14.43B | -8.71B | -34.40B | -19.88B | -15.20B | -3.54B | Financing Cash Flow |
| -14.69B | 1.01B | -15.93B | -9.31B | -12.49B | -6.90B |
Telefonaktiebolaget LM Ericsson Technical Analysis
Positive
8.41
Price Trends
8.07
Positive
8.16
Positive
7.41
Positive
Market Momentum
0.15
Negative
57.02
Neutral
76.43
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ERIC, the sentiment is Positive. The current price of 8.41 is above the 20-day moving average (MA) of 8.12, above the 50-day MA of 8.07, and above the 200-day MA of 7.41, indicating a bullish trend. The MACD of 0.15 indicates Negative momentum. The RSI at 57.02 is Neutral, neither overbought nor oversold. The STOCH value of 76.43 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ERIC.
Telefonaktiebolaget LM Ericsson Risk Analysis
Telefonaktiebolaget LM Ericsson disclosed 43 risk factors in its most recent earnings report. Telefonaktiebolaget LM Ericsson reported the most risks in the “Ability to Sell” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Telefonaktiebolaget LM Ericsson Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $254.37B | 28.02 | 20.02% | 2.50% | -5.34% | -30.57% | |
73 Outperform | $27.97B | 20.73 | 8.27% | 1.93% | -12.68% | 95.13% | |
68 Neutral | $9.83B | 120.07 | 2.96% | ― | -8.47% | -66.16% | |
60 Neutral | $12.01B | 41.91 | 6.21% | 2.44% | -8.82% | -10.01% | |
59 Neutral | $22.39B | 11.53 | -18.05% | 2.31% | 5.00% | -25.89% | |
58 Neutral | $28.69B | 14,433.30 | 0.15% | 1.98% | -5.59% | ― | |
45 Neutral | $1.57B | ― | -90.26% | ― | -12.12% | -469.62% |
* Technology Sector Average
Performance Comparison
ERIC
Telefonaktiebolaget LM Ericsson
8.66
3.28
60.97%
CIEN
Ciena
65.53
13.99
27.14%
CSCO
Cisco Systems
62.06
13.38
27.49%
INFN
Infinera
6.64
2.13
47.23%
JNPR
Juniper Networks
36.06
-0.06
-0.17%
NOK
Nokia
5.14
1.60
45.20%
Telefonaktiebolaget LM Ericsson Earnings Call Summary
Earnings Call Date: Jan 24, 2025 | % Change Since: -5.51% | Next Earnings Date: Apr 15, 2025
Earnings Call Sentiment Neutral
The Q4 2024 earnings call reflected a strong financial performance with growth in North America and significant improvements in profitability and cash flow. However, challenges remain in other global markets and segments like Cloud Software and Services, compounded by potential geopolitical and economic pressures.Highlights
Strong Financial Performance in Q4
Organic sales increased by 2% in Q4, marking the first sales growth in eight quarters. Adjusted gross margin improved to 46.3% from 41.1% in the prior year.
Record Cash Flow and Financial Position
Free cash flow for 2024 was SEK 40 billion, and the company ended the year with net cash of SEK 37.8 billion.
Growth in North America
Sales in North America increased by 54%, driven by the AT&T contract rollout and strong hardware and software demand.
Improved Profitability
Gross margin increased by more than 500 bps to 44.9%, and adjusted EBITA margin increased by 300 bps to 11%.
Strategic Partnerships and Innovations
New agreements, including the first open programmable network in Europe with MasOrange, and launch of the joint venture Aduna for network APIs.
Lowlights
Decline in Other Markets
Sales decreased in all regions outside North America and Europe, with significant declines in India, Latin America, Southeast Asia, Oceania, Northeast Asia, Middle East, and Africa.
Challenges in Cloud Software and Services
Despite underlying improvements, margins in Cloud Software and Services remained flat, indicating ongoing challenges in this segment.
Geopolitical and Economic Pressures
Potential impacts from geopolitical issues, tariffs, and macroeconomic pressures in markets like Africa and Latin America.
Company Guidance
In the earnings call for Ericsson's Q4 2024 results, the executives provided key guidance metrics highlighting a stabilizing market and improved financial performance. The company experienced a 2% organic sales growth in Q4, marking the first increase in eight quarters, driven by a 54% sales growth in North America and a 2% growth in Europe. The adjusted gross margin improved significantly by more than 500 basis points to 44.9%, while the adjusted EBITA margin increased by 300 basis points to 11%. Total headcount was reduced by 8%, contributing to an improved cost structure. Ericsson's free cash flow reached SEK 40 billion for the year, bolstered by strong working capital management and customer payments. The Board proposed a dividend of SEK 2.85 per share, reflecting a total of SEK 9.5 billion, emphasizing confidence in their strategy. Looking ahead, Ericsson expects to maintain Networks' gross margin between 47% and 49% in Q1 2025, with ongoing efforts to optimize operational efficiency and supply chain management.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.