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Telefonaktiebolaget LM Ericsson
(NASDAQ:ERIC)
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Rating:66Neutral
Price Target:
$11.00
▼(-9.54% Downside)
Action:Reiterated
Date:07/16/26
The score is driven primarily by solid financial performance (recovered profitability, strong cash generation, and manageable leverage) and a balanced earnings outlook that supports margins but flags inflation, restructuring, and segment weakness. These positives are offset by weak technicals (downtrend with negative momentum) and persistent top-line softness, while valuation and dividend yield provide moderate support.
Positive Factors
Margin resilience across core segments
Sustained high gross and EBITDA margins in Networks and improving CSS margins reflect durable product pricing power, operational scale and cost discipline. Strong structural margins support cash generation and allow reinvestment in R&D and competitive positioning over coming quarters.
Negative Factors
Persistent top-line weakness
Material and uneven revenue declines limit sustainable growth prospects and raise dependency on one-off IPR and buybacks to support returns. Continued top-line softness can constrain scale benefits, R&D spending cadence and long-term market share gains.
Read all positive and negative factors
Positive Factors
Negative Factors
Margin resilience across core segments
Sustained high gross and EBITDA margins in Networks and improving CSS margins reflect durable product pricing power, operational scale and cost discipline. Strong structural margins support cash generation and allow reinvestment in R&D and competitive positioning over coming quarters.
Read all positive factors
Telefonaktiebolaget LM Ericsson (ERIC) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$32.93B
Dividend Yield2.51%
Average Volume (3M)12.83M
Price to Earnings (P/E)12.9
Beta (1Y)0.64
Revenue Growth2.72%
EPS Growth56.42%
CountryUS
Employees87,521
SectorTechnology
Sector Strength88
IndustryCommunication Equipment
Share Statistics
EPS (TTM)7.39
Shares Outstanding3,071,530,800
10 Day Avg. Volume19,940,962
30 Day Avg. Volume12,830,499
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 Cap10.65
Enterprise Value/Revenue1.53
Enterprise Value/Gross Profit3.19
Enterprise Value/Ebitda8.35
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)0.56
Revenue Forecast (FY)$23.57B
Telefonaktiebolaget LM Ericsson Business Overview & Revenue Model
Company Description
Telefonaktiebolaget LM Ericsson (publ), along with its various subsidiaries, operates as a global supplier of communication infrastructure, software, and service solutions, primarily serving the telecommunications industry and other diverse sector...
How the Company Makes Money
Ericsson primarily makes money by selling telecom network equipment, software, and services to communications service providers (mobile and fixed-network operators) and, to a smaller extent, enterprise customers. Key revenue streams include: (1) N...
Telefonaktiebolaget LM Ericsson Earnings Call Summary
Earnings Call Date:Jul 14, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Oct 15, 2026
Earnings Call Sentiment Neutral
The call balanced clear operational and margin strengths (solid adjusted gross margins, steady EBITDA margin, CSS margin improvement, strong IPR run‑rate and disciplined cost reductions) against tangible near‑term challenges (sales softness in Networks, rising component inflation, inventory build‑up, an ongoing loss in Enterprise and elevated restructuring). Management emphasizes mitigation actions and strategic positioning for AI, but admits inflationary pressures will increasingly affect results. Overall the positives around margin resilience, cash generation within the target band and structural actions are offset by headline revenue declines and cost risks, producing a balanced outlook.Positive Updates
Strong margin delivery
Adjusted gross margin ~48.4% (group) in Q2 2026; reported gross margin ~48% (management notes +2 percentage points excluding one-off IPR benefits in Q2 2025). EBITDA margin stable at 13.1% year‑on‑year, demonstrating resilient profitability despite a challenging cost environment.
Negative Updates
Topline softness and regional variances
Group net sales SEK 52.7bn with organic sales -1% YoY; excluding the Q2 2025 IPR one‑off, organic sales grew ~1%. Networks reported sales decreased 8% YoY to SEK 33.0bn (organic -4%), with declines in Europe, Middle East & Africa and Americas; Americas down ~1% overall.
Read all updates
Q2-2026 Updates
Positive
Negative
Strong margin delivery
Adjusted gross margin ~48.4% (group) in Q2 2026; reported gross margin ~48% (management notes +2 percentage points excluding one-off IPR benefits in Q2 2025). EBITDA margin stable at 13.1% year‑on‑year, demonstrating resilient profitability despite a challenging cost environment.
Read all positive updates
Company Guidance
Ericsson’s Q3 guidance calls for Networks sales growth above the company’s three‑year average quarter‑on‑quarter seasonality and Cloud Software & Services (CSS) sales growth broadly in line with that seasonal average, with Networks adjusted gross margin expected at 48–50% (slightly down vs Q2) and a higher share of Networks rollout projects in Q3; restructuring charges for 2026 are expected to remain elevated after a large part was recorded in H1. For context, Q2 reported metrics included group net sales SEK 52.7bn (organic -1%, +1% excl. Q2 2025 IPR settlement), adjusted gross margin 48.4% (reported gross margin ~48%), EBITDA margin 13.1% and adjusted EBITDA SEK 6.9bn, IPR revenues SEK 3.4bn with a current IPR run‑rate of ~SEK 13.5bn, Networks sales SEK 33.0bn (reported -8%, organic -4%) with Networks adj. gross margin 50.4% and adj. EBITDA SEK 5.8bn (adj. EBITDA margin 17.7%), CSS sales SEK 14.7bn (reported +3%, organic +5%) with adj. gross margin 44.1% and adj. EBITDA SEK 1.8bn (14.2%), cash flow before M&A SEK 0.4bn, rolling four‑quarter cash flow/net sales 12% (upper end of 9–12% target), net cash SEK 59.8bn (down SEK 8.3bn), and an inventory build of ~SEK 5bn — all while component cost inflation is expected to build gradually and Ericsson is pursuing near‑term mitigations and price actions.Telefonaktiebolaget LM Ericsson Financial Statement Overview
Summary
Income Statement
71
Positive
Balance Sheet
74
Positive
Cash Flow
77
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 228.76B | 222.48B | 259.37B | 249.80B | 274.27B | 244.54B |
| Gross Profit | 110.10B | 107.11B | 116.57B | 99.03B | 114.63B | 106.34B |
| EBITDA | 42.03B | 45.82B | 17.15B | -9.44B | 35.45B | 40.38B |
| Net Income | 24.47B | 26.72B | 20.93M | -25.08B | 18.91B | 23.89B |
Balance Sheet | ||||||
| Total Assets | 287.17B | 279.23B | 298.01B | 309.89B | 348.07B | 306.94B |
| Cash, Cash Equivalents and Short-Term Investments | 53.97B | 56.64B | 56.50B | 44.74B | 46.19B | 66.85B |
| Total Debt | 39.38B | 46.04B | 45.59B | 54.28B | 41.43B | 41.05B |
| Total Liabilities | 182.67B | 168.96B | 204.91B | 212.56B | 217.30B | 200.05B |
| Stockholders Equity | 103.78B | 109.54B | 94.40B | 98.59B | 132.25B | 108.57B |
Cash Flow | ||||||
| Free Cash Flow | 30.44B | 28.50B | 45.96B | 3.68B | 26.65B | 37.26B |
| Operating Cash Flow | 33.05B | 30.98B | 48.40B | 6.81B | 31.17B | 41.12B |
| Investing Cash Flow | -4.03B | -10.75B | -16.69B | -8.26B | -34.74B | -20.93B |
| Financing Cash Flow | -21.57B | -13.37B | -24.97B | 955.17M | -16.09B | -9.80B |
Telefonaktiebolaget LM Ericsson Technical Analysis
Negative
12.16
Price Trends
11.94
Negative
11.69
Negative
10.69
Negative
Market Momentum
-0.48
Positive
32.72
Neutral
3.26
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 12.16 is above the 20-day moving average (MA) of 10.95, above the 50-day MA of 11.94, and above the 200-day MA of 10.69, indicating a bearish trend. The MACD of -0.48 indicates Positive momentum. The RSI at 32.72 is Neutral, neither overbought nor oversold. The STOCH value of 3.26 is Positive, 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
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
72 Outperform | $441.20B | 37.07 | 25.14% | 2.09% | 9.21% | 25.97% | |
70 Outperform | $68.61B | 32.91 | 90.39% | 1.18% | 8.32% | 2.54% | |
66 Neutral | $32.93B | 12.86 | 25.11% | 2.51% | 2.72% | 56.42% | |
66 Neutral | $60.68B | 42.03 | 6.12% | 2.17% | 23.33% | 2.87% | |
63 Neutral | $56.52B | 62.87 | 5.06% | 2.26% | 12.83% | 9.07% | |
62 Neutral | $33.04B | 35.04 | 101.45% | 0.49% | 33.34% | 71.52% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% |
* Technology Sector Average
ERIC
Telefonaktiebolaget LM Ericsson
9.82
2.51
34.41%
CSCO
Cisco Systems
111.94
44.99
67.19%
MSI
Motorola Solutions
413.31
-2.90
-0.70%
NOK
Nokia
10.12
5.46
117.21%
UI
Ubiquiti Networks
545.95
100.50
22.56%
HPE
Hewlett Packard Enterprise
45.82
25.58
126.39%
Telefonaktiebolaget LM Ericsson Corporate Events
Ericsson Delivers Margin-Resilient Q2 2026 as Sales Ease and AI Network Use Cases Advance
Jul 14, 2026
Ericsson reported its second-quarter 2026 results on July 14, showing net sales of SEK 52.7 billion, down 6% year-on-year, with organic sales declining 1% mainly due to lower intellectual property licensing revenue after a one-off settlement in 20...
Ericsson Buys Back 2.5 Million Shares in July Capital Management Push
Jul 13, 2026
Telefonaktiebolaget LM Ericsson disclosed that it repurchased a total of 2,504,354 Class B shares on Nasdaq Stockholm between July 6 and July 10, 2026, at a weighted average price of SEK 107.4083 per share and an aggregate value of about SEK 269 m...
Ericsson Buys Back SEK 331 Million of Shares Under Ongoing SEK 15 Billion Program
Jul 6, 2026
Between June 29 and July 3, 2026, Sweden’s Telefonaktiebolaget LM Ericsson repurchased 3.1 million of its own Class B shares on Nasdaq Stockholm, at a weighted average price of SEK 106.87 and a total transaction value of about SEK 331.3 mill...
Ericsson Buys Back SEK 675.7 Million of Shares in Late June 2026
Jun 29, 2026
Between June 22 and June 26, 2026, Ericsson repurchased 6,116,402 of its own Class B shares on Nasdaq Stockholm at a weighted average price of SEK 110.47, for a total transaction value of about SEK 675.7 million. The trades, executed by Goldman Sa...
Ericsson Steps Up SEK 15 Billion Buyback With June Share Repurchases
Jun 22, 2026
During June 15–19, 2026, Ericsson repurchased 4,805,778 of its own Class B shares on Nasdaq Stockholm at a weighted average price of SEK 112.2492, for a total consideration of about SEK 539.4 million. The transactions, executed by Goldman Sa...
Ericsson Names David Hammarwall Head of Business Area Networks
Jun 18, 2026
Ericsson announced on June 18, 2026 that it has appointed David Hammarwall as Head of Business Area Networks and Senior Vice President, effective October 1, 2026. He will be based in Stockholm and will join Ericsson’s Executive Team, reporti...
Ericsson Names Per Narvinger CEO as Börje Ekholm Plans 2026 Exit
Jun 16, 2026
Ericsson announced on June 16, 2026, that Executive Vice President and Head of Business Area Networks Per Narvinger will become President and CEO on October 1, 2026, succeeding Börje Ekholm. Narvinger, who joined the company in 1997 and has l...
Ericsson Steps Up SEK 15 Billion Buyback With 2.7 Million Shares Repurchased in June 2026
Jun 15, 2026
During the week of June 8–12, 2026, Ericsson repurchased 2.7 million of its own Class B shares on Nasdaq Stockholm at a weighted average price of SEK 114.40, for a total consideration of about SEK 308.9 million. The trades, executed by Goldm...
Ericsson Continues SEK 15 Billion Share Buyback With Early June Repurchases
Jun 8, 2026
Between June 1 and June 5, 2026, Ericsson repurchased 2,025,000 of its own Class B shares on Nasdaq Stockholm at a weighted average price of SEK 124.57, for a total consideration of about SEK 252.3 million. The transactions were executed by Goldma...
Ericsson Details SEK 71.5 Million Share Buybacks in Late May Under Ongoing SEK 15 Billion Program
Jun 1, 2026
During the week of May 25–29, 2026, Ericsson repurchased 585,379 of its own Class B shares on Nasdaq Stockholm at a weighted average price of SEK 122.10, for a total consideration of about SEK 71.5 million. The buybacks are part of a previou...
Ericsson Appoints Nomination Committee for 2027 Annual General Meeting
May 29, 2026
On May 29, 2026, Ericsson announced the appointment of its Nomination Committee for the 2027 Annual General Meeting, formed in line with rules set by shareholders in 2012. The committee is composed of representatives from major Swedish institution...
Ericsson Buys Back 2.5 Million Shares Under SEK 15 Billion Program
May 26, 2026
During the week of May 18–22, 2026, Ericsson repurchased 2,523,000 of its own Class B shares on Nasdaq Stockholm at a weighted average price of SEK 121.93, for a total consideration of about SEK 307.6 million. The buybacks were executed by G...
Ericsson Buys Back Over 1.1 Million Shares Under Ongoing SEK 15 Billion Program
May 18, 2026
During May 11–15, 2026, Ericsson repurchased 1,119,106 of its own Class B shares on Nasdaq Stockholm at a weighted average price of SEK 116.99, for a total transaction value of about SEK 130.9 million. The trades were executed by Goldman Sac...
Ericsson to Sell Treasury Shares to Cover 2023 Long‑Term Incentive Plan Costs
May 13, 2026
On May 13, 2026, Ericsson announced it will use a shareholder‑approved mandate to transfer a portion of its series B shares tied to its long‑term variable compensation programs I and II 2023. The company’s annual general meeting ...
Ericsson Buys Back SEK 292 Million of Shares Under Ongoing Repurchase Program
May 11, 2026
During the week of May 4–8, 2026, Ericsson repurchased 2.65 million Class B shares on Nasdaq Stockholm at a weighted average price of SEK 110.19, for a total consideration of about SEK 292 million. The transactions were executed by Goldman S...
Ericsson Reports SEK 391 Million Share Buybacks as 2026–27 Program Ramps Up
May 4, 2026
During the period April 27–30, 2026, Ericsson repurchased 3,711,316 of its own Class B shares on Nasdaq Stockholm at a weighted average price of SEK 105.50, for a total consideration of about SEK 391.5 million. These transactions form part o...
Ericsson Buys Back 2.4 Million Shares in April as Part of SEK 15 Billion Program
Apr 28, 2026
Between April 20 and April 24, 2026, Ericsson repurchased 2.4 million of its own Class B shares on Nasdaq Stockholm under its previously announced share buyback program of up to SEK 15 billion, at a corrected average price of SEK 105.69 and a tota...
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...
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.