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Telefonaktiebolaget LM Ericsson Class B (ERIC)
NASDAQ:ERIC
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Telefonaktiebolaget LM Ericsson
(NASDAQ:ERIC)
73Outperform
Telefonaktiebolaget LM Ericsson (ERIC) vs. S&P 500 (SPY)
Market Cap
$27.23B
Dividend Yield2.09%
Average Volume (3M)20.30M
Price to Earnings (P/E)13733.3
Beta (1Y)0.76
Revenue Growth-5.59%
EPS GrowthN/A
CountryUS
Employees99,952
SectorTechnology
Sector Strength46
IndustryHardware & Equipment
Share Statistics
EPS (TTM)<0.01
Shares Outstanding3,086,495,800
10 Day Avg. Volume22,245,850
30 Day Avg. Volume20,296,218
Financial Highlights & Ratios
PEG RatioN/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 Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$7.05Price Target Upside-10.31% Downside
Rating ConsensusModerate Sell
Number of Analyst Covering2
Telefonaktiebolaget LM Ericsson Business Overview & Revenue Model
Company DescriptionTelefonaktiebolaget LM Ericsson (ERIC) is a leading global provider of telecommunications equipment and services to mobile and fixed network operators. The company operates in several sectors, including networks, digital services, managed services, and emerging business, with a primary focus on developing and delivering technology solutions that enhance connectivity. Ericsson's core products and services include mobile broadband infrastructure, cloud solutions, and Internet of Things (IoT) technologies.
How the Company Makes MoneyEricsson 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.65
Positive
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.75
Positive
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.85
Very Positive
| 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
Negative
7.86
Price Trends
7.99
Negative
8.04
Negative
7.49
Positive
Market Momentum
<0.01
Positive
43.01
Neutral
22.55
Neutral
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 7.86 is below the 20-day moving average (MA) of 8.16, below the 50-day MA of 7.99, and above the 200-day MA of 7.49, indicating a neutral trend. The MACD of <0.01 indicates Positive momentum. The RSI at 43.01 is Neutral, neither overbought nor oversold. The STOCH value of 22.55 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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 (58)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $28.07B | 21.34 | 8.27% | 1.92% | -12.68% | 90.73% | |
74 Outperform | $245.86B | 26.73 | 20.02% | 2.59% | -5.34% | -30.57% | |
73 Outperform | $27.23B | 13,733.33 | 0.15% | 2.09% | -5.59% | ― | |
66 Neutral | $9.35B | 121.82 | 2.76% | ― | -7.29% | -64.31% | |
60 Neutral | $12.03B | 41.96 | 6.21% | 2.44% | -8.82% | -10.01% | |
58 Neutral | $21.67B | 10.60 | -18.43% | 2.42% | 4.66% | -24.45% |
* Technology Sector Average
Performance Comparison
ERIC
Telefonaktiebolaget LM Ericsson
7.86
2.56
48.30%
CIEN
Ciena
62.86
13.67
27.79%
CSCO
Cisco Systems
61.40
12.89
26.57%
JNPR
Juniper Networks
36.15
-0.02
-0.06%
NOK
Nokia
5.20
1.79
52.49%
Telefonaktiebolaget LM Ericsson Earnings Call Summary
Earnings Call Date: Jan 24, 2025 | % Change Since: -10.68% | 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.