Telefonaktiebolaget LM Ericsson (ERIC) AI Stock Analysis

• Market Cap: $31.87B
• Dividend Yield: 3.11%
• Average Volume (3M): 16.75M
• Price to Earnings (P/E): 12.7
• Beta (1Y): 0.65
• Revenue Growth: 1.04%
• EPS Growth: N/A
• Country: US
• Employees: 92,866
• Sector: Technology
• Sector Strength: 88
• Industry: Communication Equipment
• EPS (TTM): 0.35
• Shares Outstanding: 3,109,595,700
• 10 Day Avg. Volume: 24,488,307
• 30 Day Avg. Volume: 16,752,747
• PEG Ratio: -148.48
• Price to Book (P/B): 3.15
• Price to Sales (P/S): 1.20
• P/FCF Ratio: 6.97
• Enterprise Value/Market Cap: 0.84
• Enterprise Value/Revenue: 0.11
• Enterprise Value/Gross Profit: 0.24
• Enterprise Value/Ebitda: 0.59
• 1Y Price Target: $9.33
• Price Target Upside: -1.27% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 4

• Rating: 76 Outperform
• Price Target: $11.00 ▲(16.40% Upside)

Ericsson's overall stock score of 76 reflects strong technical momentum and solid financial health. The company's strategic focus on margin expansion and cash flow generation supports its valuation. However, challenges in revenue growth and market conditions temper the outlook. The earnings call provided positive insights into operational improvements, but sales declines in certain segments remain a concern.

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, 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 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 Financial Statement Overview

Summary

Ericsson demonstrates a balanced financial performance with strong operational efficiency and cash generation. The income statement shows moderate profitability with a net profit margin of 7.1% and inconsistent revenue growth. The balance sheet is stable with a debt-to-equity ratio of 0.42, and cash flow analysis reveals robust cash generation. Continued focus on enhancing profit margins and managing leverage is crucial.

Income Statement

Ericsson's income statement reveals a mixed performance. The TTM (Trailing-Twelve-Months) gross profit margin stands at 46.4%, reflecting strong cost control. However, the net profit margin is 7.1%, indicating moderate profitability. Revenue growth has been inconsistent, with a decline from 2023 to 2024 and a slight recovery in the latest TTM. Additionally, while the EBIT margin is healthy at 11.2%, the EBITDA margin is lower than expected at 8.6%, suggesting room for improvement in operational efficiency.

Balance Sheet

Ericsson's balance sheet indicates stability and strong equity positioning. The debt-to-equity ratio is 0.42, suggesting manageable leverage. Return on equity is moderate at 20%, providing a reasonable return to shareholders. The equity ratio stands at 32%, which is solid, reflecting a strong capital structure. Overall, the balance sheet demonstrates sound financial health with potential for leveraging equity effectively.

Cash Flow

Cash flow analysis shows a robust operating cash flow to net income ratio of 2.33, indicating efficient cash generation relative to profits. The free cash flow to net income ratio is also strong at 2.12, showcasing effective free cash generation. However, the free cash flow growth rate has been volatile, although the recent TTM figures show a positive trend, reflecting the company's ability to generate cash from operations.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	236.84B	259.37B	249.80B	274.27B	244.54B	206.97B
Gross Profit	112.72B	116.57B	99.03B	114.63B	106.34B	84.12B
EBITDA	45.88B	17.15B	-9.44B	35.45B	40.38B	32.78B
Net Income	24.25B	20.93M	-25.08B	18.91B	23.89B	15.57B
Balance Sheet
Total Assets	281.27B	298.01B	309.89B	348.07B	306.94B	273.05B
Cash, Cash Equivalents and Short-Term Investments	50.82B	56.50B	44.74B	46.19B	66.85B	50.34B
Total Debt	43.75B	45.59B	54.28B	41.43B	41.05B	39.39B
Total Liabilities	179.22B	204.91B	212.56B	217.30B	200.05B	188.03B
Stockholders Equity	102.22B	94.40B	98.59B	132.25B	108.57B	86.52B
Cash Flow
Free Cash Flow	32.15B	45.96B	3.68B	26.65B	37.26B	21.77B
Operating Cash Flow	34.61B	48.40B	6.81B	31.17B	41.12B	25.77B
Investing Cash Flow	-14.96B	-16.69B	-8.26B	-34.74B	-20.93B	-13.54B
Financing Cash Flow	-11.07B	-24.97B	955.17M	-16.09B	-9.80B	-11.13B

Telefonaktiebolaget LM Ericsson Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 9.45
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

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 9.45 is above the 20-day moving average (MA) of 8.88, above the 50-day MA of 8.26, and above the 200-day MA of 8.00, indicating a bullish trend. The MACD of 0.41 indicates Negative momentum. The RSI at 67.14 is Neutral, neither overbought nor oversold. The STOCH value of 59.30 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ERIC.

Telefonaktiebolaget LM Ericsson Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CSCO	79 Outperform	$279.21B	27.74	22.65%	2.31%	5.30%	3.07%
ERIC	76 Outperform	$31.87B	12.72	25.45%	3.11%	1.04%	―
MSI	72 Outperform	$73.14B	35.33	152.71%	0.99%	6.45%	44.24%
UI	71 Outperform	$44.50B	62.55	186.53%	0.35%	33.45%	103.34%
NOK	69 Neutral	$34.17B	35.45	4.03%	2.51%	5.05%	115.92%
HPE	69 Neutral	$30.60B	29.29	5.37%	2.21%	14.39%	-38.96%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%

Telefonaktiebolaget LM Ericsson Corporate Events

Ericsson Reports Strong Q3 2025 Performance Amid Strategic Gains

On October 14, 2025, Ericsson announced its third quarter results, highlighting strategic achievements and financial performance. The company reported strong commercial momentum with significant agreements in India, Japan, and the UK, alongside operational excellence that improved gross margins. Despite a 2% decline in organic sales, Ericsson achieved a notable increase in adjusted EBITA and net income, driven by a capital gain from the divestment of iconectiv. The company’s 5G solutions were reaffirmed as industry-leading, and it anticipates stable enterprise sales and a strong cash position, potentially enhancing shareholder distributions.

Ericsson Announces Executive Team Change with Stella Medlicott’s Departure

On August 27, 2025, Ericsson announced that Stella Medlicott will step down from her role as Senior Vice President, Chief Marketing and Communications Officer, and Head of Corporate Relations, leaving the company on March 31, 2026. Medlicott, who has been with Ericsson since 2014 and on the Executive Team since 2019, has been pivotal in shaping the company’s global image and navigating significant changes. Her departure marks a strategic transition for Ericsson as it continues to evolve its brand and leadership in the technology sector.