Telefonaktiebolaget LM Ericsson (publ) (ERIC)
Valuation Overview•Is Telefonaktiebolaget LM Ericsson (publ) Overvalued or Undervalued?
Trading at a relative discount to industry peers, suggesting a specific risk premium is applied.
Moderate quality score of 68/100, reflecting stable operating margins and manageable leverage.
Analysts remain cautious, with consensus price targets indicating limited room for upside expansion.
Verdict: Solid fundamental quality, though growth presents a headwind.
Wall Street is cautious, forecasting potential downside. This is paired with healthy capital returns, anchored by a strong, well-covered dividend yield.
ERIC demonstrates strong business quality with robust profitability and healthy margins (highlighted by a massive 22.3% ROIC). This is paired with a moderately leveraged but stable balance sheet.
The company is facing top-line contraction (-6.7% 3Y CAGR) paired with robust earnings compounding (12.2% EPS 3Y CAGR). Operating efficiency remains adequate with margins around 13.8%.
| Financial Metric | Trend (12Q) | Latest Qtr | 1Y Growth | 3Y CAGR | 5Y CAGR | 10Y CAGR |
|---|---|---|---|---|---|---|
| Revenue | $67.9B | -14.2% | -6.7% | +1.5% | -1.0% | |
| EBITDA | $13.3B | — | -1.6% | — | — | |
| Net Income | $8.4B | +127591.7% | +12.2% | — | +7.1% | |
| EPS (Diluted) | $2.51 | — | +12.2% | +11.3% | +6.9% | |
| Free Cash Flow | $14.9B | -38.0% | +2.3% | +5.5% | — |
| Metric | TTM | 3Y Avg | 5Y Avg | 10Y Avg |
|---|---|---|---|---|
| Gross Margin | 48.1% | 44.2% | 43.6% | 38.6% |
| Operating Margin | 13.8% | 8.1% | 9.9% | 7.6% |
| Net Margin | 12.1% | 0.7% | 3.7% | 0.9% |
| FCF Margin | 12.6% | 10.7% | 11.4% | 8.2% |
| Quarter | EPS Est. | EPS Act. | Surprise | EPS | Rev |
|---|---|---|---|---|---|
| Q2'26Latest | $0.11 | $0.13 | +18.2% | ||
| Q1'26 | — | $0.27 | — | ||
| Q1'26 | $0.23 | $0.27 | +17.4% | ||
| Q4'25 | $0.13 | $0.16 | +23.1% | ||
| Q3'25 | $0.12 | $0.14 | +16.7% | ||
| Q2'25 | $0.09 | $0.12 | +33.3% | ||
| Q4'24 | $0.09 | $0.11 | +22.2% | ||
| Q3'24 | $0.05 | $0.01 | -80.0% |
Total return is +40.4% (1Y), outperforming the benchmark by +15.4%
| Period | Total Return | vs S&P 500 (Alpha) | Dividend Contribution |
|---|---|---|---|
| YTD | +21.5% | +12.2% | — |
| 1Y | +40.4% | +15.4% | +3.8% |
| 3YCAGR | +32.0% | +12.5% | +15.7% |
| 5YCAGR | +0.2% | -12.6% | +10.6% |
| 10YCAGR | +5.5% | -8.0% | — |
The S&P 500 is at 31.3x trailing P/E — Expensive relative to historical averages.
Quick answers to common questions about Telefonaktiebolaget LM Ericsson (publ) (ERIC) valuation, health, and returns.
Telefonaktiebolaget LM Ericsson (publ) is estimated to be fair under our discounted cash flow framework. relative multiples indicate the stock is Cheap versus peers compared to industry peers. trading near fair value (DCF: $11.47)
Telefonaktiebolaget LM Ericsson (publ) has multiple valuation anchors: DCF Intrinsic Value: $11.47 | Peer Relative Fair Value: $341.41 | Wall Street Analyst Target: $6.94 (implying -39.0% upside). A convergence of these signals offers higher conviction.
Telefonaktiebolaget LM Ericsson (publ) displays good financial health with a composite quality score of 68/100, supported by a Altman Z-Score of 1.2 (distress zone), Piotroski F-Score of 6/9, Return on Invested Capital (ROIC) of 22.3%.
Telefonaktiebolaget LM Ericsson (publ) pays a 2.5% dividend yield, covered by a 34% payout ratio with 6 years of growth, supplemented by a 0.0% buyback yield.
Telefonaktiebolaget LM Ericsson (publ)'s current growth trajectory is Decelerating. The company achieved -14.2% 1Y revenue growth and N/A 1Y EPS growth, compared to its 3Y revenue CAGR of -6.7%.
Wall Street consensus is Hold based on 40 analysts, beating EPS expectations in 75% of recent quarters with a 6-quarter streak. The consensus price target represents a -39.0% change from current levels.
Investment risks for Telefonaktiebolaget LM Ericsson (publ) include: -17.2% 1-year max drawdown, elevated distress risk. Volatility risk is characterized by a beta of 0.88x.
No. These computations are purely quantitative model outputs for informational purposes. They do not account for qualitative management shifts or macro events. Always consult a licensed RIA before buying or selling shares.
Disclaimer: This page is for informational purposes only and does not constitute financial advice. All valuation models, scores, and target estimates are automated computations under stated assumptions and should not be relied upon as the sole basis for any investment decision.