Telefonaktiebolaget LM Ericsson Class B (ERIC.B) AI Stock Analysis

• Market Cap: kr364.87B
• Dividend Yield: 3.18%
• Average Volume (3M): 7.07M
• Price to Earnings (P/E): 10.6
• Beta (1Y): 0.68
• Revenue Growth: -2.65%
• EPS Growth: N/A
• Country: SE
• Employees: 92,866
• Sector: Technology
• Sector Strength: 88
• Industry: Communication Equipment
• EPS (TTM): 2.57
• Shares Outstanding: 3,109,595,700
• 10 Day Avg. Volume: 10,617,979
• 30 Day Avg. Volume: 7,068,121
• PEG Ratio: <0.01
• Price to Book (P/B): 2.76
• Price to Sales (P/S): 1.28
• P/FCF Ratio: 9.96
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: kr88.00
• Price Target Upside: -19.60% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 7
• EPS Forecast (FY): 6.2
• Revenue Forecast (FY): kr230.79B

• Rating: 71 Outperform
• Price Target: kr119.00 ▲(8.73% Upside)
• Action: Upgraded Date: 01/29/26
• Date: Action: Upgraded 01/29/26

The score is driven primarily by improving financial performance (earnings rebound, acceptable leverage, and positive free cash flow), tempered by a persistent multi-year revenue decline and volatility in recent profitability/cash flow. Technicals are supportive with a clear uptrend and positive momentum, while valuation looks attractive with a modest P/E and a solid dividend yield.

Positive Factors

Earnings Recovery

A material rebound in net income in 2025 strengthens Ericsson's earnings power and rebuilds retained capital, improving capacity to fund R&D, meet multi-year service obligations, and support shareholder returns. Sustained profitability would materially reduce solvency and refinancing risk over time.

Improving Capital Structure

A lower debt-to-equity ratio and rising equity enhance financial flexibility, reducing interest burden and creating capacity for strategic capex and competitive bidding on large network contracts. Stronger capitalization supports long-term contract delivery and resilience to cyclical downturns.

Positive Free Cash Flow

Sustained positive free cash flow provides durable funding for software development, network R&D, and multi-year managed services. Reliable FCF cushions the business against cyclical operator spending, funds strategic investments, and supports reinvestment without over-reliance on external financing.

Negative Factors

Persistent Revenue Decline

Three consecutive years of declining revenue erode scale and can weaken pricing power and operating leverage in a capital-intensive equipment business. Persisting top-line contraction limits reinvestment capacity and may force margin pressure or market-share defensive pricing over the medium term.

Profitability and Cash-Flow Volatility

Marked swings in profitability and cash flow, including a large loss in 2023, undermine predictability of free cash flow and complicate multi-year planning. Recurring volatility increases refinancing and operational risk and can constrain consistent investment in R&D and long-term service commitments.

Cyclicality from Operator Capex

Revenue is structurally tied to operators' 4G/5G capex cycles, making demand lumpy and timing-dependent. This dependence on external upgrade cycles limits Ericsson's ability to smooth revenue growth and exposes its results to macro budgets and operator capex decisions beyond its control.

Telefonaktiebolaget LM Ericsson Class B 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, 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 Money

Ericsson primarily makes money by selling telecommunications network equipment, software, and services to mobile network operators and other communications service providers. A major revenue stream comes from its Networks business, where it supplies radio access network products (e.g., base stations, radios, antennas, and RAN software) and related solutions used to build and upgrade 4G/5G networks; revenue is recognized through product sales and, where applicable, ongoing software subscriptions/support. Another core stream is Global Services, which generates revenue from professional services (planning, design, rollout/system integration), network optimization, and managed services/outsourcing contracts where Ericsson operates parts of a customer’s network under multi-year agreements. Ericsson also earns high-margin revenue from intellectual property rights (IPR) licensing, monetizing its standard-essential patent portfolio by licensing handset makers and other device manufacturers that implement cellular standards; this typically produces recurring royalty and/or settlement income. Additional revenue can come from digital/enterprise connectivity offerings (such as private cellular networks and network APIs, depending on the period and product mix), generally monetized through solution sales plus software and support. Key factors influencing earnings include the pace of 4G/5G investment cycles by operators, market share in network modernization contracts, long-term service contract renewals, and the scale and enforceability of Ericsson’s patent licensing agreements.

Telefonaktiebolaget LM Ericsson Class B Financial Statement Overview

Summary

Earnings rebounded sharply in 2025 with net income recovering strongly, leverage appears manageable with improving debt-to-equity, and free cash flow is positive in 2024–2025. Offsetting this, revenue has declined for three straight years and profitability/cash-flow have shown notable volatility, raising questions about durability.

Income Statement

Profitability and margins recovered sharply in 2025 (annual), with net income rebounding to 28.4B from near break-even in 2024 and a large loss in 2023. However, the top line remains under pressure, with revenue declining for three straight years (2023–2025), indicating a challenging demand/pricing backdrop. Overall, earnings power looks improved versus the prior two years, but the revenue trajectory is still a key overhang.

Balance Sheet

Leverage looks manageable for the period with data, with debt-to-equity improving to ~0.48 in 2024 versus ~0.55 in 2023 and meaningfully better than 2020 levels, while equity has grown over time (notably higher in 2025 vs. 2024). The main weakness is profitability volatility (e.g., very weak return on equity in 2024 and deeply negative in 2023), which can pressure balance-sheet strength if it reappears, even though current capitalization appears reasonable.

Cash Flow

Cash generation is solid in most years, with healthy free cash flow in 2024 (42.6B) and 2025 (30.3B), supporting financial flexibility. That said, cash flow has been volatile—2023 saw a sharp drop in both operating and free cash flow—and 2025 shows a decline versus 2024 (negative free-cash-flow growth). Overall, cash flow is generally supportive, but not consistently stable year to year.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	236.68B	247.88B	263.35B	271.55B	232.31B
Gross Profit	113.94B	109.36B	104.40B	113.30B	100.75B
EBITDA	48.75B	16.16B	-9.96B	35.10B	38.37B
Net Income	28.43B	20.00M	-26.45B	18.72B	22.69B
Balance Sheet
Total Assets	279.22B	292.37B	310.14B	349.54B	305.61B
Cash, Cash Equivalents and Short-Term Investments	56.64B	60.76B	44.77B	47.09B	66.98B
Total Debt	46.04B	45.54B	54.33B	42.23B	41.13B
Total Liabilities	168.96B	199.39B	212.73B	216.23B	198.51B
Stockholders Equity	109.53B	94.28B	98.67B	134.81B	108.78B
Cash Flow
Free Cash Flow	30.32B	42.62B	1.71B	24.67B	34.44B
Operating Cash Flow	32.95B	46.26B	7.18B	30.86B	39.06B
Investing Cash Flow	-11.44B	-15.95B	-8.71B	-34.40B	-19.88B
Financing Cash Flow	-14.22B	-23.86B	1.01B	-15.93B	-9.31B

Telefonaktiebolaget LM Ericsson Class B Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 109.45
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SE:ERIC.B, the sentiment is Positive. The current price of 109.45 is above the 20-day moving average (MA) of 104.61, above the 50-day MA of 98.36, and above the 200-day MA of 85.54, indicating a bullish trend. The MACD of 3.17 indicates Negative momentum. The RSI at 66.61 is Neutral, neither overbought nor oversold. The STOCH value of 87.15 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SE:ERIC.B.

Telefonaktiebolaget LM Ericsson Class B Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
IVSO	75 Outperform	kr12.95B	55.69	21.88%	0.87%	5.69%	4.82%
ERIC.B	71 Outperform	kr364.87B	10.63	26.04%	3.18%	-2.65%	―
HMS	67 Neutral	kr22.02B	48.34	12.76%	―	13.97%	20.46%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
EPEN	60 Neutral	kr3.12B	24.74	9.68%	1.11%	-1.85%	-16.44%
HTRO	50 Neutral	kr6.78B	-338.28	3.38%	―	0.01%	-71.63%
NETI.B	47 Neutral	kr753.69M	-176.87	-1.21%	―	-15.56%	-92.87%