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Telefonaktiebolaget LM Ericsson Class B (ERIC)
NASDAQ:ERIC
RESEARCH TOOLSreports
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Telefonaktiebolaget LM Ericsson
(NASDAQ:ERIC)
Rating:70Outperform
Price Target:
$8.50
▲(7.73% Upside)
Telefonaktiebolaget LM Ericsson (ERIC) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$26.68B
Dividend Yield3.44%
Average Volume (3M)15.02M
Price to Earnings (P/E)15.8
Beta (1Y)0.65
Revenue Growth0.98%
EPS GrowthN/A
CountryUS
Employees92,866
SectorTechnology
Sector Strength86
IndustryCommunication Equipment
Share Statistics
EPS (TTM)0.14
Shares Outstanding3,109,595,700
10 Day Avg. Volume6,743,187
30 Day Avg. Volume15,021,231
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)0.00
Price to Sales (P/S)0.00
P/FCF Ratio0.00
Enterprise Value/Market Cap1.07
Enterprise Value/Revenue0.12
Enterprise Value/Gross Profit0.25
Enterprise Value/Ebitda1.35
Forecast
1Y Price Target
$8.45Price Target Upside7.10% Upside
Rating ConsensusHold
Number of Analyst Covering3
Telefonaktiebolaget LM Ericsson Business Overview & Revenue Model
Company DescriptionTelefonaktiebolaget 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 MoneyEricsson generates revenue primarily through the sale of network equipment, software solutions, and professional services. Its revenue model consists of several key streams: the sale of hardware and software for mobile and fixed networks, managed services for network operations, and consulting services to telecommunications operators. Additionally, Ericsson benefits from ongoing maintenance and support contracts with its clients. The company also engages in strategic partnerships and collaborations with various telecom operators and technology firms, enhancing its market presence and driving revenue through joint ventures and shared projects in 5G and IoT. Factors contributing to its earnings include a growing demand for 5G infrastructure, digital transformation initiatives among service providers, and increasing investments in mobile broadband networks worldwide.
Telefonaktiebolaget LM Ericsson Earnings Call Summary
Earnings Call Date:Jul 15, 2025
(Q2-2025)
| % Change Since: 0.64%|
Next Earnings Date:Oct 14, 2025
Earnings Call Sentiment Positive
Ericsson's Q2 2025 earnings call highlighted solid growth in key regions like the Americas and significant improvements in EBITA margins across segments, driven by operational efficiencies and strategic initiatives. However, challenges remain with sales declines in specific regions, currency headwinds, and a temporary investment pause in India affecting overall performance. Despite these challenges, the ongoing advancements in AI and cost reduction measures position Ericsson well for future growth.Q2-2025 Updates
Positive Updates
Organic Growth and Margin Improvement
Ericsson achieved a 2% organic sales growth and a 3-year high EBITA margin of 13.2% in Q2 2025, reflecting strong execution against strategic priorities.
Positive EBITA for Cloud Software and Services
For the fifth consecutive quarter, Cloud Software and Services reported positive EBITA, showcasing continuous improvement in the segment.
Strong Performance in Americas
Sales in the Americas increased by 10% year-over-year, with good growth in North America attributed to previous contract wins.
Cost Reduction and Operational Efficiency
Ericsson reduced its total number of employees by 6% over the last year and lowered operating expenses by SEK 3 billion compared to the previous year.
AI and Technological Advancements
Ericsson increased investments in AI, establishing an AI factory consortium in Sweden, positioning it as a key part of network design and operation.
Negative Updates
Sales Decline in Specific Regions
Sales decreased by 22% year-over-year in South East Asia, Australia, Oceania, and India due to a temporary pause in network investments in India.
Currency and Tariff Headwinds
Ericsson faced increasing FX headwinds with a SEK 4.7 billion currency impact and a negative currency impact of SEK 2.4 billion on gross income.
Challenges in North East Asia
Sales in North East Asia declined by 15% due to reduced customer investments in some 5G front-runner markets.
Company Guidance
In the second quarter of 2025, Ericsson reported solid financial results with a 2% organic sales growth and a notable 3-year high in the EBITA margin at 13.2%. The gross margin was recorded at 48%, an improvement influenced by favorable product mix and cost-reduction initiatives. The company faced FX headwinds of approximately SEK 5 billion year-over-year, yet managed to achieve positive EBITA in their Cloud Software and Services for the fifth consecutive quarter. Ericsson's net sales totaled SEK 56.1 billion, with a reported 6% decline due to currency impacts. The adjusted gross margin increased to 48%, with broad margin improvement across all segments. The company highlighted strong performance in the Americas with a 10% sales increase, while sales in regions like Southeast Asia, Australia, and India saw declines. Ericsson continues to focus on strategic initiatives, including the expansion of 5G stand-alone networks and AI investments, positioning themselves for long-term growth despite a dynamic macroeconomic environment.Telefonaktiebolaget LM Ericsson Financial Statement Overview
Summary
Telefonaktiebolaget LM Ericsson demonstrates stable financial health with moderate profitability and efficient cash flow management. The company maintains operational efficiency and a strong balance sheet, positioning it well within the industry, despite challenges in net income growth.Income Statement
The income statement shows a moderate performance with a gross profit margin of 45.56% TTM and a net profit margin of 0.64% TTM, indicating stable profitability despite low net income. The EBIT margin improved to 8.83% TTM, and the EBITDA margin reached 18.51% TTM, showing operational efficiency. Revenue growth was slightly positive at 0.68% TTM, demonstrating steady revenue generation.70
Positive
Balance Sheet
The balance sheet reflects a solid financial position with a debt-to-equity ratio of 0.49 TTM, indicating manageable leverage. The equity ratio is 30.95% TTM, showcasing a balanced capital structure. However, return on equity is relatively low at 1.87% TTM, suggesting limited returns on shareholder investments.65
Positive
Cash Flow
The cash flow statement highlights robust cash generation with a free cash flow growth rate of -1.42% TTM, which is stable year-over-year. The operating cash flow to net income ratio is strong at 28.28 TTM, and the free cash flow to net income ratio is substantial at 26.10 TTM, indicating efficient conversion of income to cash.75
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 |
| EBITDA | 16.16B | 27.96B | 36.55B | 38.92B | 36.81B |
| Net Income | 20.00M | -26.45B | 18.72B | 22.69B | 17.48B |
Balance Sheet | |||||
| Total Assets | 292.37B | 297.04B | 349.54B | 305.61B | 271.53B |
| Cash, Cash Equivalents and Short-Term Investments | 60.76B | 44.77B | 47.09B | 66.98B | 50.43B |
| Total Debt | 45.54B | 54.33B | 42.23B | 41.13B | 39.46B |
| 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
Neutral
7.89
Price Trends
7.84
Positive
8.02
Negative
8.02
Negative
Market Momentum
0.04
Negative
60.86
Neutral
89.25
Negative
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 7.89 is above the 20-day moving average (MA) of 7.57, above the 50-day MA of 7.84, and below the 200-day MA of 8.02, indicating a neutral trend. The MACD of 0.04 indicates Negative momentum. The RSI at 60.86 is Neutral, neither overbought nor oversold. The STOCH value of 89.25 is Negative, 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
Overall Rating
UnderperformOutperform
Sector (54)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $265.87B | 25.79 | 22.58% | 2.41% | 5.30% | 3.07% | |
75 Outperform | $76.75B | 37.18 | 152.71% | 0.92% | 6.45% | 44.24% | |
73 Outperform | $29.46B | 23.19 | 6.39% | 2.30% | 11.63% | -24.41% | |
72 Outperform | $31.45B | 43.38 | 186.53% | 0.46% | 33.45% | 103.34% | |
70 Outperform | $26.68B | 15.82 | 19.63% | 3.44% | 0.98% | ― | |
57 Neutral | $23.30B | 22.13 | 4.31% | 3.57% | -2.39% | 157.33% | |
54 Neutral | $300.99M | 3.85 | -5.40% | 2.70% | 9.25% | -73.59% |
* Technology Sector Average
Performance Comparison
ERIC
Telefonaktiebolaget LM Ericsson
7.93
0.66
9.08%
CSCO
Cisco Systems
67.14
17.78
36.02%
MSI
Motorola Solutions
455.62
27.49
6.42%
NOK
Nokia
4.34
0.22
5.34%
UI
Ubiquiti Networks
519.89
336.54
183.55%
HPE
Hewlett Packard Enterprise
22.56
4.00
21.55%
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.