ERIC Valuation

Telefonaktiebolaget LM Ericsson

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7.690

-0.03(-0.389%)1D

Overview
Forecast
Valuation
Earnings

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 18.90 is considered Fairly compared with the five-year average of 13.20. The fair price of Telefonaktiebolaget LM Ericsson (ERIC) is between 5.20 to 8.14 according to relative valuation methord.

Relative Value

Fair Zone

5.20-8.14

Current Price：7.72

Fair

18.98

Trailing

Forward

8.25

EV/EBITDA

Telefonaktiebolaget LM Ericsson. (ERIC) has a current EV/EBITDA of 8.25. The 5-year average EV/EBITDA is 6.96. The thresholds are as follows: Strongly Undervalued below 3.72, Undervalued between 3.72 and 5.34, Fairly Valued between 8.58 and 5.34, Overvalued between 8.58 and 10.21, and Strongly Overvalued above 10.21. The current Forward EV/EBITDA of 8.25 falls within the Historic Trend Line -Fairly Valued range.

10.22

EV/EBIT

Telefonaktiebolaget LM Ericsson. (ERIC) has a current EV/EBIT of 10.22. The 5-year average EV/EBIT is 10.63. The thresholds are as follows: Strongly Undervalued below -3.91, Undervalued between -3.91 and 3.36, Fairly Valued between 17.90 and 3.36, Overvalued between 17.90 and 25.17, and Strongly Overvalued above 25.17. The current Forward EV/EBIT of 10.22 falls within the Historic Trend Line -Fairly Valued range.

1.05

Telefonaktiebolaget LM Ericsson. (ERIC) has a current PS of 1.05. The 5-year average PS is 1.06. The thresholds are as follows: Strongly Undervalued below 0.45, Undervalued between 0.45 and 0.75, Fairly Valued between 1.36 and 0.75, Overvalued between 1.36 and 1.66, and Strongly Overvalued above 1.66. The current Forward PS of 1.05 falls within the Historic Trend Line -Fairly Valued range.

9.51

P/OCF

Telefonaktiebolaget LM Ericsson. (ERIC) has a current P/OCF of 9.51. The 5-year average P/OCF is 10.09. The thresholds are as follows: Strongly Undervalued below 4.00, Undervalued between 4.00 and 7.05, Fairly Valued between 13.14 and 7.05, Overvalued between 13.14 and 16.18, and Strongly Overvalued above 16.18. The current Forward P/OCF of 9.51 falls within the Historic Trend Line -Fairly Valued range.

11.18

P/FCF

Telefonaktiebolaget LM Ericsson. (ERIC) has a current P/FCF of 11.18. The 5-year average P/FCF is 46.88. The thresholds are as follows: Strongly Undervalued below -388.45, Undervalued between -388.45 and -170.78, Fairly Valued between 264.55 and -170.78, Overvalued between 264.55 and 482.21, and Strongly Overvalued above 482.21. The current Forward P/FCF of 11.18 falls within the Historic Trend Line -Fairly Valued range.

Telefonaktiebolaget LM Ericsson (ERIC) has a current Price-to-Book (P/B) ratio of 2.82. Compared to its 3-year average P/B ratio of 2.19 , the current P/B ratio is approximately 29.25% higher. Relative to its 5-year average P/B ratio of 2.69, the current P/B ratio is about 4.83% higher. Telefonaktiebolaget LM Ericsson (ERIC) has a Forward Free Cash Flow (FCF) yield of approximately 15.37%. Compared to its 3-year average FCF yield of 10.51%, the current FCF yield is approximately 46.19% lower. Relative to its 5-year average FCF yield of 9.59% , the current FCF yield is about 60.22% lower.

2.85

P/B

Median3y

2.19

Median5y

2.69

15.41

FCF Yield

Median3y

10.51

Median5y

9.59

Competitors Valuation Multiple

The average P/S ratio for ERIC's competitors is 4.44, providing a benchmark for relative valuation. Telefonaktiebolaget LM Ericsson Corp (ERIC) exhibits a P/S ratio of 1.05, which is -76.27% above the industry average. Given its robust revenue growth of 3.74%, this premium appears unsustainable.

P/S

P/E

EV/EBITDA

EV/EBIT

P/S

Revenue Growth

Market Cap

ERIC.O

Telefonaktiebolaget LM Ericsson

Motorola Solutions Inc

Performance Decomposition

Market capitalization of ERIC increased by 6.80% over the past 1 year. The primary factor behind the change was an increase in P/E Change from 5.76 to 14.27.

The secondary factor is the Revenue Growth, contributed 3.74%to the performance.

Overall, the performance of ERIC in the past 1 year is driven by P/E Change. Which is more unsustainable.

3.74%

5.60B → 5.81B

Revenue Growth

-144.83%

-18.38 → 8.24

Margin Expansion

147.89%

5.76 → 14.27

P/E Change

6.80%