Telefonaktiebolaget LM Ericsson (ERIC) AI Stock Analysis

• Market Cap: $27.14B
• Dividend Yield: 3.37%
• Average Volume (3M): 9.08M
• Price to Earnings (P/E): 16.1
• Beta (1Y): 0.64
• Revenue Growth: 0.98%
• EPS Growth: N/A
• Country: US
• Employees: 92,866
• Sector: Technology
• Sector Strength: 88
• Industry: Communication Equipment
• EPS (TTM): 0.14
• Shares Outstanding: 3,109,595,700
• 10 Day Avg. Volume: 11,084,627
• 30 Day Avg. Volume: 9,075,339
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.05
• Enterprise Value/Revenue: 0.12
• Enterprise Value/Gross Profit: 0.25
• Enterprise Value/Ebitda: 1.35
• 1Y Price Target: $8.45
• Price Target Upside: 4.45% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 3

• Rating: 69 Neutral
• Price Target: $8.50 ▲(5.07% Upside)

Ericsson's overall stock score reflects a balanced financial performance with strong cash flow and stable balance sheet. The earnings call provided positive insights into strategic growth areas, despite some regional challenges. Technical indicators and valuation suggest a stable outlook with potential for future growth.

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. While revenue growth and profitability have been inconsistent, the company maintains a stable balance sheet and strong cash flow position. Continued focus on enhancing profit margins and managing leverage is crucial for long-term financial health.

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	245.86B	247.88B	263.35B	271.55B	232.31B	232.39B
Gross Profit	114.08B	109.36B	101.60B	113.30B	100.75B	93.72B
EBITDA	21.18B	16.16B	27.96B	36.55B	38.92B	36.81B
Net Income	17.37B	20.00M	-26.45B	18.72B	22.69B	17.48B
Balance Sheet
Total Assets	270.56B	292.37B	297.04B	349.54B	305.61B	271.53B
Cash, Cash Equivalents and Short-Term Investments	40.41B	60.76B	44.77B	47.09B	66.98B	50.43B
Total Debt	36.49B	45.54B	54.33B	42.23B	41.13B	39.46B
Total Liabilities	184.86B	199.39B	199.63B	216.23B	198.51B	186.35B
Stockholders Equity	86.75B	94.28B	98.67B	134.81B	108.78B	86.67B
Cash Flow
Free Cash Flow	36.83B	42.62B	3.88B	24.67B	34.44B	23.62B
Operating Cash Flow	40.42B	46.26B	7.18B	30.86B	39.06B	28.93B
Investing Cash Flow	-18.18B	-15.95B	-8.71B	-34.40B	-19.88B	-15.20B
Financing Cash Flow	-13.88B	-23.86B	1.01B	-15.93B	-9.31B	-12.49B

Telefonaktiebolaget LM Ericsson Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 8.09
• 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 ERIC, the sentiment is Positive. The current price of 8.09 is above the 20-day moving average (MA) of 7.95, above the 50-day MA of 7.69, and above the 200-day MA of 8.01, indicating a bullish trend. The MACD of 0.08 indicates Negative momentum. The RSI at 61.73 is Neutral, neither overbought nor oversold. The STOCH value of 84.13 is Negative, 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
HPE	77 Outperform	33.20B	31.56	5.11%	2.07%	14.39%	-38.96%
MSI	75 Outperform	78.55B	38.33	107.52%	0.92%	6.45%	44.24%
CSCO	73 Outperform	267.83B	26.79	22.19%	2.39%	5.30%	3.07%
UI	72 Outperform	38.85B	54.05	106.53%	0.40%	33.45%	103.34%
ERIC	69 Neutral	$27.14B	16.10	19.63%	3.37%	0.98%	―
NOK	62 Neutral	25.54B	24.33	6.18%	3.25%	-2.39%	157.33%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%

Telefonaktiebolaget LM Ericsson Corporate Events

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.

Ericsson Reports Strong Q2 2025 Results with Strategic and Operational Gains

On July 15, 2025, Ericsson announced its second quarter results for 2025, highlighting a strong operational and strategic performance. The company reported a three-year high in adjusted EBITA margin, driven by operational excellence and strategic execution in cloud software and services. Sales grew by 2%, primarily due to market area Americas and IPR licensing, although there were declines in other regions. Ericsson’s net income significantly improved to SEK 4.6 billion, compared to a loss in the previous year. The company is focusing on increasing AI investments and expanding its network API ecosystem, which is expected to drive future growth and innovation.