Telefonaktiebolaget LM Ericsson Class B (ERIC)
NASDAQ:ERIC
Top Page
Telefonaktiebolaget LM Ericsson
(NASDAQ:ERIC)
Select Model
Select Model
Rating:70Outperform
Price Target:
$11.50
▲(3.23% Upside)
Action:DowngradedDate:01/27/26
The score is driven primarily by recovering financial performance (improved profitability and manageable leverage) and constructive earnings-call takeaways (margin progress, strong net cash, and significant shareholder distributions), supported by strong technical momentum. The main constraints are uneven revenue/cash-flow trends and guidance pointing to a flattish 2026 RAN market with elevated restructuring costs.
Positive Factors
Sustained Margin Expansion
Nine consecutive quarters of EBITA margin expansion to ~18% indicates structural improvements in cost base and operational execution. Durable margin gains increase earnings resilience through industry cycles, fund R&D and shareholder returns, and reduce dependence on top-line swings for profitability.
Negative Factors
Flattish RAN Market Outlook
A flat RAN market constrains core equipment demand and limits revenue growth opportunities over the next 12–24 months. Reliance on incremental share gains or diversification into software/services becomes essential, increasing execution risk and making topline recovery dependent on non‑RAN initiatives.
Read all positive and negative factors
Positive Factors
Negative Factors
Sustained Margin Expansion
Nine consecutive quarters of EBITA margin expansion to ~18% indicates structural improvements in cost base and operational execution. Durable margin gains increase earnings resilience through industry cycles, fund R&D and shareholder returns, and reduce dependence on top-line swings for profitability.
Read all positive factors
Telefonaktiebolaget LM Ericsson (ERIC) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$37.46B
Dividend Yield2.51%
Average Volume (3M)8.70M
Price to Earnings (P/E)11.1
Beta (1Y)0.63
Revenue Growth1.04%
EPS GrowthN/A
CountryUS
Employees92,866
SectorTechnology
Sector Strength88
IndustryCommunication Equipment
Share Statistics
EPS (TTM)0.28
Shares Outstanding3,071,530,800
10 Day Avg. Volume10,024,333
30 Day Avg. Volume8,697,405
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 Cap9.70
Enterprise Value/Revenue1.58
Enterprise Value/Gross Profit3.28
Enterprise Value/Ebitda7.65
Forecast
1Y Price Target
$10.80Price Target Upside-3.05% Downside
Rating ConsensusHold
Number of Analyst Covering4
EPS Forecast (FY)0.68
Revenue Forecast (FY)$25.46B
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 generates revenue through several key streams, primarily focusing on network equipment sales, software, and services. The company's main revenue comes from selling telecommunications infrastructure, including radio access networks (RAN), ...
Telefonaktiebolaget LM Ericsson Earnings Call Summary
Earnings Call Date:Jan 23, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 17, 2026
Earnings Call Sentiment Positive
The call reported multiple clear operational and financial improvements: sustained margin expansion (nine consecutive quarters), strong adjusted gross margins (~48%), solid organic growth (Q4 organic +6%), improved segment profitability (notably Networks and Cloud Software & Services), a robust net cash position (>SEK 61B) and a sizeable shareholder distribution program (SEK 25B). These positives are tempered by meaningful currency headwinds that reduced reported sales (~‑5%), a year‑on‑year decline in cash flow versus a particularly strong 2024, a flattish RAN market outlook for 2026, elevated restructuring charges and some regional/segment softness (Northeast Asia, Latin America, Enterprise reporting affected by the iconectiv sale). Overall the company conveys disciplined execution, a constructive strategy for new growth areas (mission‑critical, 5G core, enterprise) and confidence in its balance sheet, while acknowledging near‑term headwinds and costs associated with restructuring and market uncertainty.Positive Updates
Strong Profitability and Margin Expansion
Adjusted EBITA margin reached ~18% for Q4 and full year 2025 (18.3% reported in Q4), representing the ninth consecutive quarter of year-on-year EBITA margin expansion and tracking close to the long-term 15%–18% target (18.1% for the full year; 14.9% excluding the ~3 percentage point benefit from the iconectiv gain).
Negative Updates
Reported Sales Decline Driven by Currency
Reported net sales decreased ~5% in Q4 and full year 2025, with a significant negative currency impact of SEK 6.8 billion in Q4 and SEK 13.9 billion for the full year.
Read all updates
Q4-2025 Updates
Positive
Negative
Strong Profitability and Margin Expansion
Adjusted EBITA margin reached ~18% for Q4 and full year 2025 (18.3% reported in Q4), representing the ninth consecutive quarter of year-on-year EBITA margin expansion and tracking close to the long-term 15%–18% target (18.1% for the full year; 14.9% excluding the ~3 percentage point benefit from the iconectiv gain).
Read all positive updates
Company Guidance
Management's guidance assumes stable exchange rates and no tariff changes and frames 2026 as a flattish RAN market with Networks Q1 sales growth expected to be broadly in line with the 3‑year average quarter‑on‑quarter seasonality, Cloud, Software & Services Q1 growth below that 3‑year average, and Networks adjusted gross margin for Q1 guided to 49–51%; they warned that restructuring charges for full‑year 2026 will be elevated (including proposed Sweden headcount reductions and continued actions across markets) while continuing headcount reductions overall and sustaining investments for technology leadership. The Board proposes increased shareholder distributions (dividend SEK 3/share and a buyback program up to SEK 15 billion, total ~SEK 25 billion), leaving net cash at about SEK 61.2 billion after Q4; management referenced recent performance to set expectations (Q4 net sales SEK 69.3bn, Q4 organic sales +6%, FY net sales SEK 236.7bn, FY organic +2%, Q4 adjusted gross margin ~48% and FY 48.1%, Q4 adjusted EBITA SEK 12.7bn and margin 18.3%, FY adjusted EBITA SEK 42.9bn and margin 18.1% or 14.9% excl. iconectiv, cash flow before M&A Q4 SEK 14.9bn and FY SEK 26.8bn with cash flow/net sales 11% within a 9–12% target).Telefonaktiebolaget LM Ericsson Financial Statement Overview
Summary
Income Statement
62
Positive
Balance Sheet
70
Positive
Cash Flow
68
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 222.48B | 259.37B | 249.80B | 274.27B | 244.54B |
| Gross Profit | 107.11B | 116.57B | 99.03B | 114.63B | 106.34B |
| EBITDA | 45.82B | 17.15B | -9.44B | 35.45B | 40.38B |
| Net Income | 26.72B | 20.93M | -25.08B | 18.91B | 23.89B |
Balance Sheet | |||||
| Total Assets | 279.23B | 298.01B | 309.89B | 348.07B | 306.94B |
| Cash, Cash Equivalents and Short-Term Investments | 56.64B | 56.50B | 44.74B | 46.19B | 66.85B |
| Total Debt | 46.04B | 45.59B | 54.28B | 41.43B | 41.05B |
| Total Liabilities | 168.96B | 204.91B | 212.56B | 217.30B | 200.05B |
| Stockholders Equity | 109.54B | 94.40B | 98.59B | 132.25B | 108.57B |
Cash Flow | |||||
| Free Cash Flow | 28.50B | 45.96B | 3.68B | 26.65B | 37.26B |
| Operating Cash Flow | 30.98B | 48.40B | 6.81B | 31.17B | 41.12B |
| Investing Cash Flow | -10.75B | -16.69B | -8.26B | -34.74B | -20.93B |
| Financing Cash Flow | -13.37B | -24.97B | 955.17M | -16.09B | -9.80B |
Telefonaktiebolaget LM Ericsson Technical Analysis
Positive
11.14
Price Trends
11.12
Positive
10.36
Positive
9.26
Positive
Market Momentum
0.04
Positive
49.54
Neutral
18.03
Positive
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 11.14 is below the 20-day moving average (MA) of 11.41, above the 50-day MA of 11.12, and above the 200-day MA of 9.26, indicating a neutral trend. The MACD of 0.04 indicates Positive momentum. The RSI at 49.54 is Neutral, neither overbought nor oversold. The STOCH value of 18.03 is Positive, 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
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $47.83B | 35.83 | 120.56% | 0.49% | 36.77% | 102.83% | |
75 Outperform | $71.89B | 29.58 | 103.24% | 1.18% | 6.17% | 35.41% | |
74 Outperform | $306.47B | 23.23 | 23.64% | 2.09% | 8.91% | 14.53% | |
70 Outperform | $37.46B | 11.10 | 29.57% | 2.51% | 1.04% | ― | |
66 Neutral | $31.59B | 17.34 | -0.64% | 2.17% | 14.17% | -102.25% | |
63 Neutral | $43.86B | 49.36 | 4.38% | 2.26% | 5.05% | 115.92% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% |
* Technology Sector Average
ERIC
Telefonaktiebolaget LM Ericsson
11.27
3.57
46.44%
CSCO
Cisco Systems
77.59
17.24
28.56%
MSI
Motorola Solutions
433.97
1.71
0.39%
NOK
Nokia
8.04
2.81
53.70%
UI
Ubiquiti Networks
790.29
467.15
144.57%
HPE
Hewlett Packard Enterprise
23.81
8.09
51.44%
Telefonaktiebolaget LM Ericsson Corporate Events
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...
Ericsson Announces Executive Team Change Amid Strategic Transition
Nov 12, 2025
On November 11, 2025, Ericsson announced that Moti Gyamlani will step down from his role as Senior Vice President and Head of Group Function Global Operations on January 12, 2026. Gyamlani, who joined Ericsson in 2019 and became part of the Execut...
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.