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

• Market Cap: kr275.13B
• Dividend Yield: 3.49%
• Average Volume (3M): 4.66M
• Price to Earnings (P/E): 169.9
• Beta (1Y): 0.91
• Revenue Growth: -1.79%
• EPS Growth: N/A
• Country: SE
• Employees: 92,866
• Sector: Technology
• Sector Strength: 87
• Industry: Communication Equipment
• EPS (TTM): 1.24
• Shares Outstanding: 3,109,595,700
• 10 Day Avg. Volume: 4,795,361
• 30 Day Avg. Volume: 4,662,773
• PEG Ratio: -0.62
• Price to Book (P/B): 1.50
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 8.22
• 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: kr73.25
• Price Target Upside: -10.58% Downside
• Rating Consensus: Moderate Sell
• Number of Analyst Covering: 8

• Rating: 53 Neutral
• Price Target: kr82.00 ▲(0.10%Upside)

The overall stock score is primarily influenced by mixed financial performance and bearish technical indicators. Strong cash flow generation and a stable balance sheet are positive factors, but profitability challenges and a high P/E ratio weigh heavily on the score. The technical analysis suggests a neutral to bearish outlook, while the valuation indicates potential overvaluation despite a decent dividend yield.

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 primarily through its Networks, Digital Services, Managed Services, and Emerging Business segments. The Networks segment is the largest contributor, driven by the sale of hardware and software for radio access and transport networks. The Digital Services segment provides telecom operators with solutions like OSS/BSS, cloud communication, and 5G core, generating income through software licensing and support services. Managed Services offer network operation and optimization services, providing stable, recurring revenue streams. Emerging Business, including IoT and technology licensing, contributes additional revenue. Strategic partnerships with telecom operators and enterprises, as well as participation in large-scale infrastructure projects, are significant factors enhancing Ericsson's earnings.

Telefonaktiebolaget LM Ericsson Class B Financial Statement Overview

Summary

Mixed financial performance with strong cash flow generation and a stable balance sheet, but challenges in profitability. The income statement indicates a need for improved cost management and profitability enhancement.

Income Statement

The gross profit margin for TTM (Trailing-Twelve-Months) is approximately 45.56%, indicating solid profitability from core operations. The net profit margin stands at 0.64%, demonstrating a significant decline from previous years, suggesting challenges in managing costs or other expenses. Revenue has decreased over the past few years, with a slight positive growth in the most recent TTM period, indicating potential stabilization. EBIT and EBITDA margins show improvement, but overall profitability remains a concern.

Balance Sheet

The debt-to-equity ratio for TTM is 0.49, reflecting moderate leverage and a balanced financial structure. Return on equity (ROE) is low at 1.87%, suggesting the firm is generating minimal returns on shareholders' investments. The equity ratio is at 30.95%, indicating a solid equity base. Overall, the balance sheet shows stability, though profitability remains a challenge.

Cash Flow

Free cash flow has shown growth, with a robust operating cash flow to net income ratio of 28.29, indicating strong cash generation relative to accounting profit. The free cash flow to net income ratio is exceptionally high at 26.09, reflecting efficient cash utilization. The cash flow position is strong, providing resilience against earnings volatility.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	249.58B	247.88B	263.35B	271.55B	232.31B	232.39B
Gross Profit	113.71B	109.36B	104.40B	113.30B	100.75B	93.72B
EBITDA	45.74B	16.16B	-9.96B	35.10B	38.37B	36.80B
Net Income	1.61B	20.00M	-26.45B	18.72B	22.69B	17.48B
Balance Sheet
Total Assets	277.98B	292.37B	310.14B	349.54B	305.61B	271.53B
Cash, Cash Equivalents and Short-Term Investments	52.13B	60.76B	44.77B	47.09B	66.98B	50.43B
Total Debt	42.42B	45.54B	54.33B	42.23B	41.13B	39.46B
Total Liabilities	193.12B	199.39B	212.73B	216.23B	198.51B	186.35B
Stockholders Equity	86.04B	94.28B	98.67B	134.81B	108.78B	86.67B
Cash Flow
Free Cash Flow	42.02B	42.62B	1.71B	24.67B	34.44B	23.62B
Operating Cash Flow	45.54B	46.26B	7.18B	30.86B	39.06B	28.93B
Investing Cash Flow	-13.31B	-15.95B	-8.71B	-34.40B	-19.88B	-15.20B
Financing Cash Flow	-16.10B	-23.86B	1.01B	-15.93B	-9.31B	-12.49B

Telefonaktiebolaget LM Ericsson Class B Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 81.92
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Negative
• 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 81.92 is above the 20-day moving average (MA) of 80.93, above the 50-day MA of 81.58, and below the 200-day MA of 83.38, indicating a neutral trend. The MACD of -0.03 indicates Negative momentum. The RSI at 54.03 is Neutral, neither overbought nor oversold. The STOCH value of 91.92 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
Sector *	69 Neutral	¥229.24B	14.26	7.64%	2.72%	9.14%	8.60%
ERIC.B	53 Neutral	kr275.13B	169.85	1.65%	3.49%	-1.79%	―
0GRX		kr255.77B	22.71	9.32%	17.84%	―	―
0GT8		kr3.72B	24.26	10.90%	10.34%	―	―
02H0		€544.29M	16.90	9.71%	―	―	―
96W		€39.69M	1,870.00	-6.45%	1.32%	―	―
NSGB		€124.28M	32.17	6.63%	―	―	―