One-glance verdict
Undervalued
$22.95 our estimate vs market $10.12
Wall Street consensus: $9.67 (-57.9% lower than our fair-value estimate)
56% below our estimate, below the bear case
Fundamentals snapshot
Telefonaktiebolaget LM Ericsson (publ)
ERIC · NMS · Technology · Communication Equipment
Current price
$10.12
52-week range
$7.84 - $13.77
Market cap
$33.08B
Balance sheet
Healthy
11.18x Adequate
Net cash $0.00. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
3 Risks
3 rewards · 3 risks
- Reward Returns 26.1% on equity, ahead of 40% of its peers.
- Reward Free cash flow was positive in 4/10 years.
- Risk Forward P/E (16.2x) is higher than trailing (13.1x) - earnings are expected to drop.
- Risk Operating margin compressed from 9.9% to 0.0% over 3 years.
What this company does
Telefonaktiebolaget LM Ericsson (publ)
Ericsson builds and sells the essential hardware and software that make our mobile phone networks, like 5G, work. The company earns most of its revenue (the total money a company brings in from sales) by selling this network equipment to large communication providers all over the world. This makes Ericsson a key company in the global effort to build faster and more reliable mobile internet.
How the company got here
Founded in 1876 in Stockholm, Sweden, Ericsson started as a repair shop for telegraph equipment. It quickly moved into making telephones and expanded across the world, becoming a key supplier of telephone exchanges that switch calls between different lines. Over the decades, the company became a major force in the development of mobile networks, from the early days of 2G and 3G to today's 5G technology. A key turning point was its decision to exit the mobile phone handset business in 2012, after a joint venture with Sony, to focus entirely on the underlying network infrastructure (the equipment and software that makes mobile communication possible).
What it actually does
You can't buy an Ericsson phone anymore, but there's a good chance your mobile carrier (the company you pay for cell service) uses Ericsson's equipment to provide you with coverage. Ericsson builds and manages the hardware and software that make mobile networks function, from the big cell towers you see to the complex core systems that connect your calls and data. Think of them as building the highways and traffic control systems for mobile communication. They serve customers in about 180 countries, and it's estimated that 40% of the world's mobile calls travel over their networks.
Networks
This is Ericsson's largest and core business, making up the majority of its sales. This segment sells the essential hardware and software for mobile networks, including antennas, radios, and other equipment that creates the 4G and 5G networks your phone connects to. Their main customers are the big communication service providers (like AT&T, Verizon, or T-Mobile) who buy this equipment to build out and upgrade their mobile coverage. This division is all about providing the physical and digital foundation for mobile communication.
Cloud Software and Services
This part of the company provides the brains behind the network. It offers complex software that helps mobile operators manage their networks, handle billing, and automate their operations. This includes the 'core network,' which is the central part of a telecom network that handles things like authenticating users and routing calls and data. This segment is crucial for making networks more efficient and preparing them for future technologies, and it represents a significant portion of the company's business.
Enterprise
This is a newer and growing part of Ericsson's business focused on selling directly to large companies, not just traditional mobile carriers. It provides private 5G networks for places like factories, ports, and large corporate campuses that need highly reliable and secure wireless connections. This segment also includes solutions for businesses to connect their various locations and devices wirelessly, as well as platforms that allow software developers to build new applications using network capabilities.
What management is betting on now
Ericsson's main focus is to maintain its leadership in 5G network technology while pushing into new areas for growth. A major bet is on the Enterprise segment, where it aims to sell private 5G networks directly to businesses, creating a new customer base beyond its traditional telecom operator clients. The company is also investing heavily in making networks more programmable and intelligent through software and artificial intelligence (AI), which would allow new services to be created and sold. Finally, management is focused on improving profitability (the ability to make a profit) in its software and services business and making its equipment more energy-efficient.
Price history
How the share price has moved
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Is it cheap or expensive?
Fair value $22.95 vs current price $10.12
Wall Street consensus is the average analyst price target: $9.67 (-57.9% lower than our fair-value estimate).
Our most-likely fair value is $22.95 a share — about 126.8% above today's price of $10.12, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Healthy
Net cash $0 - more cash than debt. Interest coverage 11.2x.
Net debt
$0.00
Interest coverage
11.18x
Telefonaktiebolaget LM Ericsson (publ)'s profit covers its interest bill about 11.2 times over. which is stronger than every peer shown here.
Healthy
Worse cushion
Baseline
Better cushion
ERIC
BASELINE
Telefonaktiebolaget LM Ericsson (publ)
Total debt — Interest coverage 11.18x This is the baseline the peer rows are being compared against.
Total debt $3.91B Interest coverage 3.57x -68% vs ERIC Carries about 3.1x less debt cushion than ERIC.
Total debt $29.53B Interest coverage 7.85x -30% vs ERIC Carries about 1.4x less debt cushion than ERIC.
Total debt $9.62B Interest coverage 8.22x -26% vs ERIC Carries about 1.4x less debt cushion than ERIC.
Total debt $1.58B Interest coverage 3.39x -70% vs ERIC Carries about 3.3x less debt cushion than ERIC.
What you should know
The case for and against ERIC
3 Rewards
3 Risks
Rewards
-
Returns 26.1% on equity, ahead of 40% of its peers.
-
Free cash flow was positive in 4/10 years.
-
Trades at 13.1x P/E vs peer median 53.4x (75.4% cheaper).
Risks
-
Forward P/E (16.2x) is higher than trailing (13.1x) - earnings are expected to drop.
-
Operating margin compressed from 9.9% to 0.0% over 3 years.
-
Insider ownership is only 0.0% (peer median: 0.5%).
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
13.14x
Forward P/E
16.22x
P/B
0.33x
P/S
—
EV/EBITDA
—
PEG ratio
1.90x
Profitability
How much profit each dollar creates
Gross margin
48.1%
Operating margin
0.0%
Net margin
10.8%
ROE
26.1%
ROA
6.9%
Health
Liquidity and balance-sheet strength
Debt / equity
0.38x
Current ratio
1.12x
Quick ratio
0.86x
Total debt
—
Total cash
—
Growth
How the business has been compounding
Revenue TTM
$24.80B
Revenue 5Y CAGR
-4.5%
EPS TTM
0.77
EPS 5Y CAGR
14.8%
Cash flow
How much cash the business throws off
Operating CF TTM
$3.45B
Free CF TTM
$3.06B
FCF margin
12.3%
Dividend
Shareholder payout
Yield
3.2%
Payout ratio
40.3%
Last ex-div date
2026-09-29