Latest Ratios: P/E Ratio 12.1x · EV/EBITDA 8.5x · ROE 26.3%. (1996–2025 historical series)
Price-based multiples — how expensive the stock is relative to earnings, sales, book value, and cash flow
| Metric | TTM | FY 2025 | FY 2024 | FY 2023 | FY 2022 | FY 2021 | FY 2020 | FY 2019 | FY 2018 | FY 2017 | FY 2016 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Market Cap | $32.3B | $32.3B | $26.9B | $21.0B | $19.5B | $36.2B | $39.7B | $29.1B | $29.4B | $22.2B | $19.3B |
| Enterprise Value | $32.5B | $34.4B | $28.6B | $40.1B | $23.3B | $23.3B | $35.6B | $31.6B | $24.1B | $19.3B | $8.9B |
| P/E Ratio → | 12.07 | 1.21 | 1343.33 | — | 1.03 | 1.52 | 2.55 | 13.72 | — | — | 10.60 |
| P/S Ratio | 1.43 | 0.14 | 0.10 | 0.08 | 0.07 | 0.15 | 0.19 | 0.13 | 0.13 | 0.11 | 0.08 |
| P/B Ratio | 2.93 | 0.29 | 0.29 | 0.22 | 0.15 | 0.34 | 0.47 | 0.37 | 0.33 | 0.22 | 0.14 |
| P/FCF | 11.16 | 1.13 | 0.59 | 5.70 | 0.73 | 0.97 | 1.83 | 2.58 | 5.30 | 3.95 | 2.29 |
| P/OCF | 10.27 | 1.04 | 0.56 | 3.08 | 0.62 | 0.88 | 1.54 | 1.80 | 3.05 | 2.36 | 1.29 |
P/E links to full P/E history page with 30-year chart
Enterprise-value multiples — capital-structure-neutral measures of total business value
| Metric | TTM | FY 2025 | FY 2024 | FY 2023 | FY 2022 | FY 2021 | FY 2020 | FY 2019 | FY 2018 | FY 2017 | FY 2016 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| EV / Revenue | — | 0.15 | 0.11 | 0.16 | 0.08 | 0.10 | 0.17 | 0.14 | 0.11 | 0.10 | 0.04 |
| EV / EBITDA | 8.48 | 0.91 | 1.44 | 1.51 | 0.59 | 0.56 | 1.09 | 1.13 | 1.55 | — | 0.37 |
| EV / EBIT | 10.41 | 0.89 | 4.28 | — | 0.87 | 0.71 | 1.34 | 2.87 | 48.13 | — | 1.48 |
| EV / FCF | — | 1.21 | 0.62 | 10.90 | 0.87 | 0.63 | 1.64 | 2.80 | 4.34 | 3.43 | 1.06 |
Margins and return-on-capital ratios measuring operating efficiency
Full margin charts and quarterly trend are on the Earnings History page
| Metric | TTM | FY 2025 | FY 2024 | FY 2023 | FY 2022 | FY 2021 | FY 2020 | FY 2019 | FY 2018 | FY 2017 | FY 2016 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Gross Margin | 48.1% | 48.1% | 44.9% | 39.6% | 41.8% | 43.5% | 40.6% | 37.5% | 35.2% | 24.6% | 30.6% |
| Operating Margin | 13.8% | 13.8% | 3.6% | 6.8% | 11.3% | 14.0% | 12.7% | 9.7% | 4.9% | -6.9% | 6.0% |
| Net Profit Margin | 12.0% | 12.0% | 0.0% | -10.0% | 6.9% | 9.8% | 7.5% | 1.0% | -3.1% | -15.9% | 0.8% |
| Metric | TTM | FY 2025 | FY 2024 | FY 2023 | FY 2022 | FY 2021 | FY 2020 | FY 2019 | FY 2018 | FY 2017 | FY 2016 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| ROE | 26.3% | 26.3% | 0.0% | -22.0% | 15.9% | 24.9% | 18.9% | 2.5% | -7.2% | -26.5% | 1.3% |
| ROA | 9.3% | 9.3% | 0.0% | -7.6% | 5.8% | 8.2% | 5.7% | 0.8% | -2.5% | -11.4% | 0.6% |
| ROIC | 22.3% | 22.3% | 6.6% | 10.2% | 20.3% | 29.5% | 24.2% | 19.1% | 8.9% | -9.1% | 8.2% |
| ROCE | 18.4% | 18.4% | 5.4% | 8.8% | 16.1% | 20.3% | 16.6% | 13.1% | 6.4% | -7.6% | 7.3% |
Solvency and debt-coverage ratios — lower is generally safer
| Metric | TTM | FY 2025 | FY 2024 | FY 2023 | FY 2022 | FY 2021 | FY 2020 | FY 2019 | FY 2018 | FY 2017 | FY 2016 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Debt / Equity | 0.42 | 0.42 | 0.49 | 0.56 | 0.32 | 0.38 | 0.46 | 0.58 | 0.38 | 0.34 | 0.19 |
| Debt / EBITDA | 1.22 | 1.22 | 2.30 | 2.05 | 1.05 | 0.98 | 1.21 | 1.66 | 2.17 | — | 1.13 |
| Net Debt / Equity | — | 0.02 | 0.02 | 0.20 | 0.03 | -0.12 | -0.05 | 0.03 | -0.06 | -0.03 | -0.07 |
| Net Debt / EBITDA | 0.06 | 0.06 | 0.08 | 0.72 | 0.10 | -0.31 | -0.13 | 0.09 | -0.34 | — | -0.43 |
| Debt / FCF | — | 0.07 | 0.04 | 5.20 | 0.14 | -0.35 | -0.19 | 0.21 | -0.96 | -0.52 | -1.23 |
| Interest Coverage | 13.55 | 13.55 | 1.80 | -5.76 | 13.62 | 17.95 | 13.40 | 4.83 | 0.24 | -23.68 | 3.43 |
Short-term solvency ratios and asset-utilisation metrics
| Metric | TTM | FY 2025 | FY 2024 | FY 2023 | FY 2022 | FY 2021 | FY 2020 | FY 2019 | FY 2018 | FY 2017 | FY 2016 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Current Ratio | 1.29 | 1.29 | 1.17 | 1.20 | 1.19 | 1.38 | 1.31 | 1.32 | 1.45 | 1.54 | 1.85 |
| Quick Ratio | 1.08 | 1.08 | 0.96 | 0.92 | 0.88 | 1.10 | 1.06 | 1.05 | 1.19 | 1.28 | 1.52 |
| Cash Ratio | 0.51 | 0.51 | 0.43 | 0.35 | 0.32 | 0.53 | 0.44 | 0.44 | 0.41 | 0.43 | 0.53 |
| Asset Turnover | — | 0.80 | 0.87 | 0.81 | 0.79 | 0.80 | 0.76 | 0.81 | 0.79 | 0.74 | 0.82 |
| Inventory Turnover | 4.92 | 4.92 | 5.25 | 4.17 | 3.51 | 3.89 | 4.31 | 4.56 | 4.76 | 5.81 | 5.18 |
| Days Sales Outstanding | — | 104.12 | 95.87 | 104.33 | 101.69 | 104.20 | 121.36 | 113.31 | 144.07 | 153.41 | 137.98 |
Earnings, FCF, buyback, and dividend yields — total returns to shareholders
Full dividend history and growth charts are on the Dividend History page
| Metric | TTM | FY 2025 | FY 2024 | FY 2023 | FY 2022 | FY 2021 | FY 2020 | FY 2019 | FY 2018 | FY 2017 | FY 2016 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Dividend Yield | 2.8% | 27.8% | 35.0% | 40.7% | 43.2% | 20.0% | 13.4% | 14.7% | 12.0% | 15.1% | 66.8% |
| Payout Ratio | 33.6% | 33.6% | 44984.3% | — | 44.5% | 30.4% | 34.3% | 200.2% | — | — | 702.7% |
| Metric | TTM | FY 2025 | FY 2024 | FY 2023 | FY 2022 | FY 2021 | FY 2020 | FY 2019 | FY 2018 | FY 2017 | FY 2016 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings Yield | 8.3% | 82.9% | 0.1% | — | 97.1% | 66.0% | 39.2% | 7.3% | — | — | 9.4% |
| FCF Yield | 9.0% | 88.4% | 170.8% | 17.5% | 136.9% | 102.9% | 54.8% | 38.7% | 18.9% | 25.3% | 43.7% |
| Buyback Yield | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.1% | 0.1% |
| Total Shareholder Yield | 2.8% | 27.8% | 35.0% | 40.7% | 43.2% | 20.0% | 13.4% | 14.7% | 12.0% | 15.2% | 66.9% |
| Shares Outstanding | — | $3.3B | $3.3B | $3.3B | $3.3B | $3.3B | $3.3B | $3.3B | $3.3B | $3.3B | $3.3B |
Includes 30+ ratios · 30 years · Updated daily
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Quick answers to the most common questions about buying ERIC stock.
Telefonaktiebolaget LM Ericsson (publ)'s current P/E ratio is 12.1x. The historical average is 4.2x. This places it at the 96th percentile of its historical range.
Telefonaktiebolaget LM Ericsson (publ)'s current EV/EBITDA is 8.5x. This enterprise value multiple compares the company's total value (equity + debt - cash) to its EBITDA. The historical average is 1.3x.
Telefonaktiebolaget LM Ericsson (publ)'s return on equity (ROE) is 26.3%. This is above the typical threshold of 15-20% considered good for most companies. The historical average is 7.3%.
Based on historical data, Telefonaktiebolaget LM Ericsson (publ) is trading at a P/E of 12.1x. This is at the 96th percentile of its historical P/E range. Compare with industry peers and growth rates for a complete picture.
Telefonaktiebolaget LM Ericsson (publ)'s current dividend yield is 2.78% with a payout ratio of 33.6%.
Telefonaktiebolaget LM Ericsson (publ) has 48.1% gross margin and 13.8% operating margin. Operating margin between 10-20% is typical for established companies.
Telefonaktiebolaget LM Ericsson (publ)'s Debt/EBITDA ratio is 1.2x, indicating moderate leverage. A ratio below 2x is generally considered financially healthy.
Key Metrics
Top Statement Risk
Revenue decline and margin volatility
Deep Value or Value Trap?
ERIC trades at 11.8x trailing earnings and 8.3x EV/EBITDA, a steep discount to peers like CSCO at 48x P/E, per reported multiples, suggesting the market prices in continued revenue contraction.
The forward P/E of 1.83 is distorted by depressed forward earnings estimates, likely reflecting anticipated margin normalization or one-time charges. The PEG of 1.04 implies the market expects growth to reaccelerate, but with six consecutive quarters of revenue decline, this appears optimistic. Investors should monitor whether the discount is justified by structural challenges or represents an opportunity.
Margin Recovery Masks Underlying Pressure
Gross margin expanded from 42.7% in 2024Q1 to 48.4% in 2026Q2, per financial statements, yet operating margin remains volatile, swinging from 4.4% to 17.1%, indicating cost actions are not fully offsetting revenue weakness.
The 2025Q3 net margin of 19.8% appears inflated by non-operating gains, as noted in prior analysis, and the latest quarter's 7.7% net margin is more sustainable. The improvement in gross margin suggests successful cost discipline and product mix shifts, but the persistence of revenue decline limits operating leverage. The true earning power is better reflected by normalized operating margin, which has averaged around 12% over the last four quarters.
Returns on Capital Remain Subpar
ROIC has improved from 1.5% in 2024Q1 to 5.2% in 2026Q2, per reported figures, but remains below the cost of capital, indicating value creation is still elusive despite margin gains.
ROE has been volatile, with a negative -11.5% in 2024Q2, but has recovered to 4.0% in 2026Q2. The improvement in ROIC is driven by margin expansion rather than asset efficiency, as asset turnover has remained flat around 0.2x. This suggests that the company is not yet compounding returns at a level that would justify a premium valuation, and investors should monitor whether ROIC can sustainably exceed the cost of capital.
Working Capital Drag Intensifies
Cash conversion cycle lengthened from 82 days in 2024Q4 to 106 days in 2026Q2, per reported data, driven by rising DSO and DIO, indicating deteriorating working capital efficiency and potential customer payment delays.
DSO has increased from 82 to 104 days, while DIO has risen from 64 to 91 days, suggesting slower collections and higher inventory levels. DPO has also increased but not enough to offset the lengthening cycle. This trend is concerning as it ties up cash and may indicate softening demand or customer leverage. The company's FCF margin has contracted sharply from 24.0% to 2.4%, partly due to these working capital swings, underscoring the need for improved efficiency.
Leverage Eases but Coverage Remains Thin
Debt-to-equity improved from 0.58 in 2024Q2 to 0.38 in 2026Q2, per balance sheet data, yet interest coverage fell to 9.5x in 2026Q2 from 20.1x in 2025Q4, indicating reduced but still manageable debt service capacity.
Total debt has declined to $39.4B, and cash of $41.6B nearly covers it, providing a solid liquidity buffer. However, the volatility in interest coverage, which was negative in 2024Q2, highlights the sensitivity to earnings swings. The D/EBITDA ratio of 4.75x in 2026Q2 is elevated relative to the 3.45x in 2025Q4, suggesting that EBITDA generation has weakened. While refinancing risk appears low given the cash position, investors should monitor coverage ratios if revenue continues to decline.
Liquidity Adequate but Quick Ratio Below 1
Current ratio stands at 1.12 with a quick ratio of 0.89 in 2026Q2, per reported figures, indicating reliance on inventory to meet short-term obligations, which could be a concern under stress.
The quick ratio below 1 suggests that excluding inventory, current liabilities exceed liquid assets, which may strain liquidity if inventory becomes difficult to sell. However, the company holds $41.6B in cash, providing a substantial buffer. The current ratio has remained stable around 1.1, but the trend in working capital efficiency is deteriorating, as seen in the lengthening CCC. Under a severe demand shock, the liquidity position could tighten, but the cash pile mitigates immediate risk.
Misapplied Metric: P/E on Distorted Earnings
The trailing P/E of 11.8x is misleading given the volatile net income, which swung from a loss in 2024Q2 to a 19.8% net margin in 2025Q3, per reported data, obscuring true earning power.
Investors often use P/E to gauge value, but ERIC's earnings are heavily influenced by one-time items and non-operating gains, making the ratio unreliable. A more appropriate metric is EV/EBITDA, which at 8.3x is more stable and reflects the company's operating performance. Additionally, forward P/E of 1.83 is distorted by depressed forward earnings estimates, likely reflecting anticipated margin normalization or one-time charges. Analysts should focus on normalized operating earnings and cash flow metrics to assess valuation.