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

• Market Cap: kr300.52B
• Dividend Yield: 3.18%
• Average Volume (3M): 7.07M
• Price to Earnings (P/E): 12.1
• Beta (1Y): 0.87
• Revenue Growth: -2.65%
• EPS Growth: N/A
• Country: SE
• Employees: 92,866
• Sector: Services
• Sector Strength: N/A
• Industry: Communication Equipment
• EPS (TTM): 3.33
• Shares Outstanding: 3,109,595,700
• 10 Day Avg. Volume: 10,617,979
• 30 Day Avg. Volume: 7,068,121
• PEG Ratio: N/A
• Price to Book (P/B): 0.00
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 0.00
• 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: kr82.21
• Price Target Upside: -8.17% Downside
• Rating Consensus: Moderate Sell
• Number of Analyst Covering: 9

• Rating: 74 Outperform
• Price Target: kr103.00 ▲(15.06% Upside)

The stock's overall score is driven by strong financial performance, particularly in cash flow and balance sheet stability, and attractive valuation metrics. However, technical indicators suggest caution due to overbought conditions, which could impact short-term price movements.

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 generates revenue through multiple streams, primarily from the sale of network equipment and software, as well as from providing managed services and consultancy to telecom operators. Key revenue streams include the provision of hardware and software for mobile and fixed networks, which are essential for building and maintaining telecommunications infrastructure. Additionally, Ericsson earns significant income from ongoing service contracts and maintenance agreements, which ensure continuous revenue from existing customers. The company also benefits from strategic partnerships with various telecom operators and technology firms, fostering collaboration in deploying advanced solutions such as 5G networks. Furthermore, Ericsson's investment in research and development allows it to remain competitive and capitalize on emerging technologies, contributing to its overall profitability.

Telefonaktiebolaget LM Ericsson Class B Financial Statement Overview

Summary

Overall, Telefonaktiebolaget LM Ericsson Class B presents a stable financial picture with strong cash flow generation and a solid balance sheet. The income statement shows areas for improvement, particularly in revenue growth and net profit margins. However, the company's effective cash flow management and prudent leverage position it well within the industry, allowing for potential growth and resilience against market fluctuations.

Income Statement

The income statement shows a mixed performance. The TTM data reflects a gross profit margin of 46.52%, showing good profitability. However, the net profit margin is 7.04%, indicating modest profitability relative to revenue. Revenue has been declining, with a noticeable drop from the previous year, impacting overall growth trends. The EBIT margin for TTM is strong at 11.46%, yet EBITDA margin is lower at 9.51%, reflecting potential inefficiencies or increased costs.

Balance Sheet

The balance sheet reflects stable financial health with a debt-to-equity ratio of 0.50, indicating moderate leverage. The return on equity (ROE) is 19.95%, which is strong and suggests efficient use of equity. The equity ratio is 32.07%, demonstrating a solid capital structure. Overall, the balance sheet shows a well-managed financial position with a good balance between debt and equity.

Cash Flow

Cash flow analysis shows robust cash generation with a free cash flow of SEK 37.03 billion in the TTM period. The operating cash flow to net income ratio is high at 2.34, indicating strong cash conversion from profits. Free cash flow to net income ratio is also healthy at 2.14, reflecting efficient cash flow management. Despite past fluctuations, current cash flows are strong and support the company's financial stability.

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	104.40B	113.30B	100.75B	93.72B
EBITDA	16.16B	-9.96B	35.10B	38.37B	36.80B
Net Income	20.00M	-26.45B	18.72B	22.69B	17.48B
Balance Sheet
Total Assets	292.37B	310.14B	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	212.73B	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	1.71B	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 Class B Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 89.52
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Neutral

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 89.52 is above the 20-day moving average (MA) of 80.35, above the 50-day MA of 76.10, and above the 200-day MA of 78.74, indicating a bullish trend. The MACD of 3.76 indicates Negative momentum. The RSI at 74.28 is Negative, neither overbought nor oversold. The STOCH value of 77.93 is Neutral, 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
ERIC.B	74 Outperform	kr300.52B	12.11	26.04%	3.18%	-2.65%	―
HTRO	69 Neutral	€3.97B	10.88	9.42%	―	0.07%	-31.25%
IVSO	66 Neutral	kr13.67B	53.47	27.03%	0.78%	12.46%	25.56%
HMS	64 Neutral	$22.59B	59.83	10.83%	1.02%	10.70%	-18.64%
EPEN	63 Neutral	kr3.75B	26.86	9.07%	1.07%	-9.14%	-29.28%
Sector *	55 Neutral	$13.29B	17.42	10.03%	0.93%	7.13%	-12.93%
NETI.B	47 Neutral	€1.33B	863.64	0.15%	―	-12.55%	-98.16%