Ericsson may be undervalued with mixed growth prospects, but the 6 analysts following the company give it an rating of underperform. Their target prices range from $9.2 to $11.4 per share, for an average of $10.45. At today's price of $13.04, Ericsson is trading 24.78% away from its average target price, suggesting there is an analyst belief that shares are overpriced for the stock.
Telefonaktiebolaget LM Ericsson (publ), together with its subsidiaries, provides mobile connectivity solutions to communications service providers, enterprises, and the public sector in the Americas, Europe, the Middle East, Africa, Northeast Asia, Southeast Asia, Oceania, and India. Based in Stockholm, Sweden, the Large-Cap Technology company has 87,521 full time employees. Ericsson has not offered a dividend over the last year.
Ericsson has a trailing twelve month P/E ratio of 16.1, compared to an average of 30.44 for the Technology sector. Considering its EPS guidance of $0.68, the company has a forward P/E ratio of 19.2.
On the other hand, the market is potentially undervaluing Ericsson in terms of its book value because its P/B ratio is 0.42. In comparison, the sector average P/B ratio is 4.19. The company's shares are currently -83.5% above their Graham number, which suggests that they are not trading at a fair value in terms of earnings and net assets.
| 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $232,390 | $232,314 | $271,546 | $263,351 | $247,880 | $236,681 |
| Gross Margins | 40% | 43% | 42% | 39% | 44% | 48% |
| Net Margins | 8% | 10% | 7% | -10% | 0% | 12% |
| Net Income (M) | $17,623 | $22,980 | $19,112 | -$26,104 | $374 | $28,714 |
| Net Interest Expense (M) | -$596 | -$2,530 | -$2,411 | -$2,993 | $1,724 | -$332 |
| Depreciation & Amort. (M) | $7,978 | $8,458 | $10,142 | $11,157 | $10,020 | $8,909 |
| Diluted Shares (M) | 3,334,151,735 | 3,334 | 3,334 | 3,344 | 3,348 | 3,371 |
| Earnings Per Share | $5.26 | $6.81 | $5.62 | -$7.94 | $0.01 | $8.51 |
| EPS Growth | n/a | 29.47% | -17.47% | -241.28% | 100.13% | 85000.0% |
| Free Cash Flow (M) | $28,933 | $39,065 | $30,863 | $7,177 | $46,261 | $32,954 |
| Total Debt (M) | $22,218 | $22,241 | $26,946 | $29,218 | $31,904 | $29,165 |
| Net Debt / EBITDA | -0.6 | -0.79 | -0.31 | 0.65 | -0.84 | -0.31 |
| Current Ratio | 1.31 | 1.38 | 1.19 | 1.2 | 1.17 | 1.29 |
