ERIC Relative Valuation
ERIC's fair value is calculated using relative valuation, based on historical P/E and P/S ranges and their premiums/discounts relative to a competitor average, adjusted by weights. If the market price exceeds this fair value range, ERIC is overvalued; if below, it's undervalued.
Historical Valuation
Telefonaktiebolaget LM Ericsson (ERIC) is now in the Fair zone, suggesting that its current forward PE ratio of 16.25 is considered Fairly compared with the five-year average of 12.86. The fair price of Telefonaktiebolaget LM Ericsson (ERIC) is between 7.11 to 11.50 according to relative valuation methord.
Relative Value
Fair Zone
7.11-11.50
Current Price：9.53
Fair
15.98
PE
1Y
3Y
5Y
Trailing
Forward
8.56
EV/EBITDA
Telefonaktiebolaget LM Ericsson. (ERIC) has a current EV/EBITDA of 8.56. The 5-year average EV/EBITDA is 6.89. The thresholds are as follows: Strongly Undervalued below 3.82, Undervalued between 3.82 and 5.36, Fairly Valued between 8.43 and 5.36, Overvalued between 8.43 and 9.97, and Strongly Overvalued above 9.97. The current Forward EV/EBITDA of 8.56 falls within the Overvalued range.
10.89
EV/EBIT
Telefonaktiebolaget LM Ericsson. (ERIC) has a current EV/EBIT of 10.89. The 5-year average EV/EBIT is 10.51. The thresholds are as follows: Strongly Undervalued below -4.00, Undervalued between -4.00 and 3.25, Fairly Valued between 17.77 and 3.25, Overvalued between 17.77 and 25.02, and Strongly Overvalued above 25.02. The current Forward EV/EBIT of 10.89 falls within the Historic Trend Line -Fairly Valued range.
1.30
PS
Telefonaktiebolaget LM Ericsson. (ERIC) has a current PS of 1.30. The 5-year average PS is 1.04. The thresholds are as follows: Strongly Undervalued below 0.46, Undervalued between 0.46 and 0.75, Fairly Valued between 1.33 and 0.75, Overvalued between 1.33 and 1.63, and Strongly Overvalued above 1.63. The current Forward PS of 1.30 falls within the Historic Trend Line -Fairly Valued range.
11.34
P/OCF
Telefonaktiebolaget LM Ericsson. (ERIC) has a current P/OCF of 11.34. The 5-year average P/OCF is 9.84. The thresholds are as follows: Strongly Undervalued below 4.24, Undervalued between 4.24 and 7.04, Fairly Valued between 12.63 and 7.04, Overvalued between 12.63 and 15.43, and Strongly Overvalued above 15.43. The current Forward P/OCF of 11.34 falls within the Historic Trend Line -Fairly Valued range.
16.18
P/FCF
Telefonaktiebolaget LM Ericsson. (ERIC) has a current P/FCF of 16.18. The 5-year average P/FCF is 46.43. The thresholds are as follows: Strongly Undervalued below -388.84, Undervalued between -388.84 and -171.21, Fairly Valued between 264.07 and -171.21, Overvalued between 264.07 and 481.71, and Strongly Overvalued above 481.71. The current Forward P/FCF of 16.18 falls within the Historic Trend Line -Fairly Valued range.
Telefonaktiebolaget LM Ericsson (ERIC) has a current Price-to-Book (P/B) ratio of 2.95. Compared to its 3-year average P/B ratio of 2.30 , the current P/B ratio is approximately 27.91% higher. Relative to its 5-year average P/B ratio of 2.62, the current P/B ratio is about 12.40% higher. Telefonaktiebolaget LM Ericsson (ERIC) has a Forward Free Cash Flow (FCF) yield of approximately 10.43%. Compared to its 3-year average FCF yield of 10.61%, the current FCF yield is approximately -1.72% lower. Relative to its 5-year average FCF yield of 10.13% , the current FCF yield is about 2.91% lower.
2.90
P/B
Median3y
2.30
Median5y
2.62
10.52
FCF Yield
Median3y
10.61
Median5y
10.13
Competitors Valuation Multiple
The average P/S ratio for ERIC's competitors is 1.36, providing a benchmark for relative valuation. Telefonaktiebolaget LM Ericsson Corp (ERIC) exhibits a P/S ratio of 1.30, which is -4.74% above the industry average. Given its robust revenue growth of -0.28%, this premium appears unsustainable.
P/S
P/E
EV/EBITDA
EV/EBIT
P/S
Revenue Growth
Market Cap
Performance Decomposition
1Y
3Y
5Y
Market capitalization of ERIC increased by 20.04% over the past 1 year. The primary factor behind the change was an increase in Margin Expansion from 6.28 to 20.09.
The secondary factor is the Revenue Growth, contributed -0.28%to the performance.
Overall, the performance of ERIC in the past 1 year is driven by Margin Expansion. Which is more sustainable.
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FAQ
Is Telefonaktiebolaget LM Ericsson (ERIC) currently overvalued or undervalued?
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What is the current P/B ratio for Telefonaktiebolaget LM Ericsson (ERIC) as of Dec 05 2025?
What is the current FCF Yield for Telefonaktiebolaget LM Ericsson (ERIC) as of Dec 05 2025?
What is the current Forward P/E ratio for Telefonaktiebolaget LM Ericsson (ERIC) as of Dec 05 2025?