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Telefonaktiebolaget L M Ericsson ADR ERIC

Morningstar Rating
$5.50 +0.02 (0.37%)
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Company Report

Long-Term Demand for Mobile Network Equipment Offers Some Support to Ericsson's Business

In its core business of selling to wireless carriers, Ericsson enjoyed success in the early stages of public 5G network buildouts. According to Ericsson, its global radio access network, or RAN, market share, excluding China, jumped from 33% in 2017 to 39% in 2022. While carriers typically source from multiple vendors, and Ericsson has benefited by the explicit or implicit exclusion of Huawei and ZTE equipment in many western markets, there is little doubt Ericsson has outperformed, as Nokia has acknowledged RAN market share weakness. Ericsson is poised to capitalize on its early inroads as a preferred vendor. As its customers continue building out their 5G networks, Ericsson should take an outsize share of follow-on services and subsequent equipment needs.

Price vs Fair Value

ERIC is trading at a 39% discount.
Price
$5.50
Fair Value
$1.00
Uncertainty
Medium
1-Star Price
$41.88
5-Star Price
$8.20
Economic Moat
Hcnvg
Capital Allocation
Lyxnhcgcl

Bulls Say, Bears Say

Bulls

Early success and market share gains at the onset of 5G network rollouts will build on itself and lock Ericsson in as a preferred vendor for many wireless firms throughout the 5G cycle.

Bears

The customer base remains concentrated with wireless carriers, who typically use multiple vendors and have significant buying power, limiting Ericsson’s pricing power.

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News

Trading Information

Previous Close Price
$5.48
Day Range
$5.445.51
52-Week Range
$4.336.36
Bid/Ask
$5.46 / $5.50
Market Cap
$18.32 Bil
Volume/Avg
9.7 Mil / 15.4 Mil

Key Statistics

Price/Earnings (Normalized)
13.11
Price/Sales
0.74
Dividend Yield (Trailing)
4.59%
Dividend Yield (Forward)
4.59%
Total Yield
4.59%

Company Profile

Ericsson provides telecom equipment and services that are primarily used to build and facilitate mobile networks through operations in three segments: networks, cloud and software services, and enterprises. The firm's customers have historically been primarily wireless carriers, but the firm is making a push to cater more to other enterprises as well, both as they try to take advantage of 5G capabilities and on other “as-a-service” communications platforms. The company also licenses its patents to handset manufacturers so their devices are compatible with wireless networks.
Sector
Technology
Industry
Communication Equipment
Stock Style Box
Large Core
Total Number of Employees
99,952

Competitors

Valuation

Metric
ERIC
CSCO
NOK
Price/Earnings (Normalized)
13.1111.9111.91
Price/Book Value
1.864.300.88
Price/Sales
0.743.510.84
Price/Cash Flow
10.1512.447.17
Price/Earnings
ERIC
CSCO
NOK

Financial Strength

Metric
ERIC
CSCO
NOK
Quick Ratio
0.791.101.37
Current Ratio
1.101.371.66
Interest Coverage
−5.5733.764.05
Quick Ratio
ERIC
CSCO
NOK

Profitability

Metric
ERIC
CSCO
NOK
Return on Assets (Normalized)
−6.75%17.02%3.94%
Return on Equity (Normalized)
−17.96%38.38%7.69%
Return on Invested Capital (Normalized)
−12.80%30.59%5.98%
Return on Assets
ERIC
CSCO
NOK
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Communication Equipment Industry Comparables

Ticker
Name
Morningstar Rating for Stocks
Economic Moat
Market Cap
CSCO
Cisco Systems IncLsb$198.9 Bil
MSI
Motorola Solutions IncBcmwck$55.8 Bil
HPE
Hewlett Packard Enterprise CoYht$22.3 Bil
NOKBF
Nokia OyjJbcp$19.9 Bil
NOK
Nokia Oyj ADRYdkp$19.9 Bil
ZTCOF
ZTE Corp Class HKknf$18.8 Bil
ERIXF
Telefonaktiebolaget L M Ericsson Class BHdvm$18.1 Bil
ZBRA
Zebra Technologies Corp Class AMpbvnj$15.0 Bil
SATS
EchoStar Corp Class AJjyzx$3.5 Bil

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