Telefonaktiebolaget LM Ericsson Class B (ERIC)
NASDAQ:ERIC
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Telefonaktiebolaget LM Ericsson
(NASDAQ:ERIC)
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Rating:72Outperform
Price Target:
$13.00
▲(6.91% Upside)
Action:ReiteratedDate:04/21/26
The score is driven primarily by improved profitability, strong free cash flow quality, and manageable leverage, reinforced by constructive trend signals and a modest P/E. It is held back by declining revenue in 2025/TTM, historical volatility, and near-term risks from FX pressure, elevated restructuring costs, Enterprise segment losses, and potential H2 input-cost inflation.
Positive Factors
Strong cash generation & net cash position
High and closely tracked free cash flow (FCF ~92–93% of net income) and a net cash position (SEK 68.1bn) provide durable liquidity and financial flexibility. This supports continued R&D, buybacks, and buffer versus cyclical capex needs, improving resilience across 2–6 months.
Negative Factors
Negative top-line growth in 2025 and TTM
Sustained negative revenue growth in 2025 and trailing twelve months constrains operating leverage and calls into question the durability of margin improvements. If top-line weakness persists, it will limit scalable profit growth and make margins more vulnerable to cost inflation and cyclical demand shifts.
Read all positive and negative factors
Positive Factors
Negative Factors
Strong cash generation & net cash position
High and closely tracked free cash flow (FCF ~92–93% of net income) and a net cash position (SEK 68.1bn) provide durable liquidity and financial flexibility. This supports continued R&D, buybacks, and buffer versus cyclical capex needs, improving resilience across 2–6 months.
Read all positive factors
Telefonaktiebolaget LM Ericsson (ERIC) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$39.21B
Dividend Yield2.51%
Average Volume (3M)11.16M
Price to Earnings (P/E)96.4
Beta (1Y)0.57
Revenue Growth1.04%
EPS GrowthN/A
CountryUS
Employees92,866
SectorTechnology
Sector Strength88
IndustryCommunication Equipment
Share Statistics
EPS (TTM)0.03
Shares Outstanding3,071,530,800
10 Day Avg. Volume14,233,672
30 Day Avg. Volume11,160,465
Financial Highlights & Ratios
PEG Ratio<0.01
Price to Book (P/B)2.71
Price to Sales (P/S)1.33
P/FCF Ratio10.41
Enterprise Value/Market Cap8.65
Enterprise Value/Revenue1.48
Enterprise Value/Gross Profit3.08
Enterprise Value/Ebitda7.34
Forecast
1Y Price Target
$10.80Price Target Upside-11.18% Downside
Rating ConsensusHold
Number of Analyst Covering4
EPS Forecast (FY)0.64
Revenue Forecast (FY)$25.07B
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, Manage...
How the Company Makes Money
Ericsson primarily makes money by selling network infrastructure products, software, and services to mobile network operators and other communications service providers, with additional revenue from enterprise-focused connectivity solutions. Key r...
Telefonaktiebolaget LM Ericsson Earnings Call Summary
Earnings Call Date:Apr 17, 2026
(Q1-2026)
| Next Earnings Date:Jul 10, 2026
Earnings Call Sentiment Positive
The call presents a constructive operational picture: healthy organic growth (6%), robust gross margins (group 48.1%, Networks 50.4%), improving software margins, strong cash generation (net cash SEK 68.1bn) and a sizable SEK 15bn buyback. These positives are tempered by material FX headwinds (reported sales down 10% and SEK 7.8bn FX impact), an unacceptable Enterprise loss (adjusted EBITA -SEK 1.4bn) and looming input cost pressure from semiconductors/memory that may hit in H2. Management emphasized supply‑chain resilience, margin levers (pricing, product substitution, service efficiencies) and ongoing cost programs, but some cost savings will show with a delay. Overall, operational momentum and financial flexibility outweigh the near‑term headwinds, though risks remain from currency, component inflation and elevated restructuring costs.Positive Updates
Strong Organic Revenue Growth
Net sales totaled SEK 49.3 billion with organic sales growth of 6% year‑on‑year, and all segments contributed to organic growth.
Negative Updates
Significant Currency Headwind
Reported sales fell 10% year‑on‑year mainly due to a negative currency effect of SEK 7.8 billion as the Swedish krona strengthened; currency also adversely impacted EBITA by SEK 2.2 billion and adjusted gross income by SEK 3.8 billion.
Read all updates
Q1-2026 Updates
Positive
Negative
Strong Organic Revenue Growth
Net sales totaled SEK 49.3 billion with organic sales growth of 6% year‑on‑year, and all segments contributed to organic growth.
Read all positive updates
Company Guidance
Guidance: For Q2 Ericsson assumes no tariff changes and the exchange rates stated in the report; it expects Networks sales to be broadly in line with the company’s 3‑year average quarter‑on‑quarter seasonality while Cloud Software & Services sales should grow above that 3‑year average q/q, with Networks adjusted gross margin guided to 49–51%; restructuring charges for 2026 are expected to be elevated (a fairly large part already in Q1) and management flagged stronger‑than‑normal seasonality in Q2 as some deals were pushed from Q1, while reiterating long‑term targets of mid‑single‑digit revenue growth and EBITA margins of 15–18% (and commencing a SEK 15 billion share buyback).Telefonaktiebolaget LM Ericsson Financial Statement Overview
Summary
Income Statement
64
Positive
Balance Sheet
72
Positive
Cash Flow
78
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 229.49B | 222.48B | 259.37B | 249.80B | 274.27B | 244.54B |
| Gross Profit | 110.27B | 107.11B | 116.57B | 99.03B | 114.63B | 106.34B |
| EBITDA | 46.17B | 45.82B | 17.15B | -9.44B | 35.45B | 40.38B |
| Net Income | 24.78B | 26.72B | 20.93M | -25.08B | 18.91B | 23.89B |
Balance Sheet | ||||||
| Total Assets | 288.79B | 279.23B | 298.01B | 309.89B | 348.07B | 306.94B |
| Cash, Cash Equivalents and Short-Term Investments | 62.74B | 56.64B | 56.50B | 44.74B | 46.19B | 66.85B |
| Total Debt | 39.07B | 46.04B | 45.59B | 54.28B | 41.43B | 41.05B |
| Total Liabilities | 186.22B | 168.96B | 204.91B | 212.56B | 217.30B | 200.05B |
| Stockholders Equity | 101.87B | 109.54B | 94.40B | 98.59B | 132.25B | 108.57B |
Cash Flow | ||||||
| Free Cash Flow | 32.68B | 28.50B | 45.96B | 3.68B | 26.65B | 37.26B |
| Operating Cash Flow | 35.19B | 30.98B | 48.40B | 6.81B | 31.17B | 41.12B |
| Investing Cash Flow | -10.21B | -10.75B | -16.69B | -8.26B | -34.74B | -20.93B |
| Financing Cash Flow | -15.24B | -13.37B | -24.97B | 955.17M | -16.09B | -9.80B |
Telefonaktiebolaget LM Ericsson Technical Analysis
Neutral
12.16
Price Trends
11.33
Positive
10.52
Positive
9.38
Positive
Market Momentum
0.18
Negative
46.88
Neutral
62.84
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ERIC, the sentiment is Neutral. The current price of 12.16 is above the 20-day moving average (MA) of 11.53, above the 50-day MA of 11.33, and above the 200-day MA of 9.38, indicating a neutral trend. The MACD of 0.18 indicates Negative momentum. The RSI at 46.88 is Neutral, neither overbought nor oversold. The STOCH value of 62.84 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $62.18B | 35.83 | 120.56% | 0.49% | 36.77% | 102.83% | |
75 Outperform | $74.04B | 29.58 | 103.24% | 1.18% | 6.17% | 35.41% | |
74 Outperform | $354.31B | 23.23 | 23.64% | 2.09% | 8.91% | 14.53% | |
72 Outperform | $39.21B | 96.42 | 25.11% | 2.51% | 1.04% | ― | |
68 Neutral | $57.72B | 45.81 | 4.38% | 2.26% | 5.05% | 115.92% | |
66 Neutral | $38.16B | 17.34 | -0.64% | 2.17% | 14.17% | -102.25% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% |
* Technology Sector Average
ERIC
Telefonaktiebolaget LM Ericsson
11.32
3.27
40.64%
CSCO
Cisco Systems
88.59
33.57
61.01%
MSI
Motorola Solutions
443.17
19.66
4.64%
NOK
Nokia
10.33
5.58
117.43%
UI
Ubiquiti Networks
1,037.87
726.72
233.56%
HPE
Hewlett Packard Enterprise
27.93
12.15
76.98%
Telefonaktiebolaget LM Ericsson Corporate Events
Ericsson Posts Q1 2026 Organic Growth but Profit Hit by Currency and Restructuring
Apr 17, 2026
On April 17, 2026, Ericsson reported first-quarter 2026 results showing 6% organic sales growth, led by its Networks segment and supported by a more balanced global footprint. At Mobile World Congress, the company unveiled AI-native radios, reinfo...
Ericsson Launches SEK 15 Billion Share Buyback to Optimize Capital Structure
Apr 16, 2026
On April 16, 2026, Ericsson’s Board of Directors approved the launch of a share buyback program for its ordinary Class B shares on Nasdaq Stockholm, using the authorization granted at the March 31, 2026 Annual General Meeting. The program, c...
Ericsson AGM Approves 2025 Accounts, SEK 3 Dividend and Expanded Long-Term Incentive Plans
Apr 1, 2026
Telefonaktiebolaget LM Ericsson held its Annual General Meeting on March 31, 2026, in Kista, Stockholm, where shareholders approved the 2025 income statements and balance sheets, discharged the board and CEO from liability, and confirmed Jan Carls...
Ericsson Files 2025 Form 20‑F Annual Report with U.S. SEC
Mar 13, 2026
On March 12, 2026, Ericsson filed its Annual Report on Form 20‑F for the fiscal year ended December 31, 2025, with the U.S. Securities and Exchange Commission. The filing, accessible via the company’s investor relations website and ava...
Ericsson Publishes 2025 Annual Report with ESRS-Compliant Sustainability Disclosure
Mar 4, 2026
On March 4, 2026, Ericsson published its Annual Report 2025, detailing the company’s financial results and sustainability performance for the year, along with its overarching strategy, governance framework, and remuneration policies for top ...
Ericsson Announces Details of 2026 Annual General Meeting of Shareholders
Feb 24, 2026
Telefonaktiebolaget LM Ericsson has called its 2026 Annual General Meeting of shareholders for March 31, 2026, to be held at the company’s premises in Kista, Stockholm, with proceedings in Swedish and simultaneous English translation. The no...
Ericsson Lifts Profitability and Payouts on Strong 2025, Flags Flat RAN Market for 2026
Jan 23, 2026
On January 23, 2026, Ericsson reported its fourth-quarter and full-year 2025 results, highlighting broad-based organic sales growth in all segments in Q4, including 12% growth in Cloud Software and Services, and improved profitability driven by op...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.