Telefonaktiebolaget LM Ericsson (ERIC) AI Stock Analysis

• Market Cap: $24.66B
• Dividend Yield: 0.35%
• Average Volume (3M): 19.08M
• Price to Earnings (P/E): 14.4
• Beta (1Y): 0.60
• Revenue Growth: 0.98%
• EPS Growth: N/A
• Country: US
• Employees: 92,866
• Sector: Technology
• Sector Strength: 94
• Industry: Communication Equipment
• EPS (TTM): 0.14
• Shares Outstanding: 3,109,595,700
• 10 Day Avg. Volume: 23,382,641
• 30 Day Avg. Volume: 19,077,795
• PEG Ratio: 0.01
• Price to Book (P/B): 2.79
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 6.54
• 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: $8.90
• Price Target Upside: 20.60% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 2

• Rating: 63 Neutral
• Price Target: $7.50 ▲(1.63%Upside)

Ericsson's overall stock score reflects strong earnings call insights, with growth in 5G and AI initiatives, balanced by financial and valuation concerns. The company's strategic focus is promising, but technical analysis and high P/E ratio suggest potential caution. The stable financial performance provides a solid foundation despite current market challenges.

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 its four business segments: Networks, Digital Services, Managed Services, and Emerging Business and Other. The Networks segment is the largest contributor, providing solutions for mobile networks, including 5G, 4G, and 3G radio access networks and related services. Digital Services offers software and services for operators to transform their operations, including OSS/BSS, cloud infrastructure, and telecom core solutions. Managed Services provides outsourced network operations and services, helping telecom operators manage their networks efficiently. The Emerging Business and Other segment explores new growth areas such as IoT, edge computing, and private networks. Key revenue streams include sales of hardware and software, service contracts, and licensing of intellectual property. Ericsson also collaborates with global telecom operators, enterprises, and governments, which significantly contribute to its revenue through long-term contracts and strategic partnerships.

Telefonaktiebolaget LM Ericsson Financial Statement Overview

Summary

Telefonaktiebolaget LM Ericsson demonstrates stable financial health with moderate profitability and efficient cash flow management. The company maintains operational efficiency and a strong balance sheet, positioning it well within the industry, despite challenges in net income growth.

Income Statement

The income statement shows a moderate performance with a gross profit margin of 45.56% TTM and a net profit margin of 0.64% TTM, indicating stable profitability despite low net income. The EBIT margin improved to 8.83% TTM, and the EBITDA margin reached 18.51% TTM, showing operational efficiency. Revenue growth was slightly positive at 0.68% TTM, demonstrating steady revenue generation.

Balance Sheet

The balance sheet reflects a solid financial position with a debt-to-equity ratio of 0.49 TTM, indicating manageable leverage. The equity ratio is 30.95% TTM, showcasing a balanced capital structure. However, return on equity is relatively low at 1.87% TTM, suggesting limited returns on shareholder investments.

Cash Flow

The cash flow statement highlights robust cash generation with a free cash flow growth rate of -1.42% TTM, which is stable year-over-year. The operating cash flow to net income ratio is strong at 28.28 TTM, and the free cash flow to net income ratio is substantial at 26.10 TTM, indicating efficient conversion of income to cash.

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	101.60B	113.30B	100.75B	93.72B
EBITDA	16.16B	27.96B	36.55B	38.92B	36.81B
Net Income	20.00M	-26.45B	18.72B	22.69B	17.48B
Balance Sheet
Total Assets	292.37B	297.04B	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	199.63B	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	3.88B	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 Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 7.38
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Positive
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ERIC, the sentiment is Negative. The current price of 7.38 is below the 20-day moving average (MA) of 8.19, below the 50-day MA of 8.37, and below the 200-day MA of 8.08, indicating a bearish trend. The MACD of -0.24 indicates Positive momentum. The RSI at 25.07 is Positive, neither overbought nor oversold. The STOCH value of 11.04 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ERIC.

Telefonaktiebolaget LM Ericsson Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CSCO	78 Outperform	$266.03B	27.53	21.36%	2.43%	0.47%	-17.77%
MSI	78 Outperform	$68.22B	34.10	189.18%	1.07%	7.45%	46.78%
HPE	74 Outperform	$26.61B	20.95	6.39%	2.56%	11.63%	-24.41%
JNPR	71 Outperform	$13.42B	38.18	7.58%	2.20%	-2.56%	52.05%
NOK	64 Neutral	$25.83B	31.67	5.70%	4.35%	-9.96%	-6.83%
Sector *	63 Neutral	$34.16B	5.47	-11.67%	1.85%	5.30%	-18.30%
ERIC	63 Neutral	$24.66B	14.40	19.63%	0.35%	0.98%	―