Telefonaktiebolaget LM Ericsson (publ) (ERIC) AI Stock Analysis
ERIC AI stock analysis summary
AI ResearchTelefonaktiebolaget LM Ericsson (publ) (ERIC) provides global telecommunications infrastructure, software, and managed services across four operating segments. In FY2025, revenue contracted 14.2% to $222.48B, though net income reached $26.72B with a net margin of 12.0%. The company maintains a net cash position of $19.94B and yields 3.03% with a trailing price-to-earnings multiple of 17.0x.
- Market cap
- $34.24B
- Revenue (TTM)
- $240.31B
- P/E
- 17.0x fwd 18.0x
- 1Y return
- 14.8% S&P 500 16.8%
- Avg. target
- $9.47 -10.3% vs last close
Bull case
- Free cash flow reached $28.50B in FY2025, supporting a net cash position of $19.94B as of September 30, 2026.
- Valuation multiples remain discounted relative to peers, with an EV/EBITDA of 7.0x compared to the US-listed Technology peer median of 16.6x.
- The stock offers a 3.03% dividend yield backed by a payout ratio of 29.4% and 22 consecutive years of dividend payments.
Bear case
- Full-year revenue declined 14.2% in FY2025 to $222.48B, and 5-year revenue CAGR stands at 1.5%.
- Wall Street coverage shows 0 Buy ratings and 4 Sell or Strong Sell ratings, with a mean price target of $9.47 that sits 10.3% below the last close.
- Quarterly earnings fell 46.8% year-over-year in the latest quarter, and consensus estimates project current fiscal year EPS to fall 33.3% to $0.67.
What Telefonaktiebolaget LM Ericsson does
Telefonaktiebolaget LM Ericsson (publ) provides communication infrastructure, services, and software solutions globally, primarily to the telecommunications sector. The company operates through four segments: Networks, Digital Services, Managed Services, and Emerging Business and Other. Networks delivers radio access network solutions, integrated antennas, transport solutions, network deployment, and support services. Digital Services offers software for business support systems, operational support systems, communication services, core networks, and cloud infrastructure. Managed Services provides IT and network operations, network design, optimization, and application development. Emerging Business and Other encompasses IoT initiatives, Cradlepoint wireless edge WAN solutions, Red Bee Media, and related ventures.
Growth and profitability
Ericsson recorded a 5-year revenue CAGR of 1.5% from FY2020 to FY2025. Annual revenue grew 18.1% in FY2021 to $244.54B and 12.2% in FY2022 to $274.27B, before declining 8.9% in FY2023 to $249.80B, with net income of -$25.08B. Revenue rebounded 3.8% in FY2024 to $259.37B, then declined 14.2% in FY2025 to $222.48B. Despite lower FY2025 sales, gross margin improved to 48.1% and operating margin reached 13.8%, lifting net income to $26.72B and EPS to $0.98. In the trailing twelve months ending September 30, 2026, revenue stood at $240.31B with a profit margin of 8.4%. For the latest quarter, quarterly revenue rose 5.8% year-over-year while quarterly earnings fell 46.8%.
Balance sheet and cash flow
As of September 30, 2026, Ericsson held $59.46B in cash and short-term investments against $39.52B in total debt, yielding net cash of $19.94B. Total assets stood at $304.97B and shareholders' equity was $111.75B. The company recorded a current ratio of 1.16 and a debt-to-equity ratio of 0.35. In FY2025, operating cash flow was $30.98B and free cash flow was $28.50B. Capital expenditures were $2.47B, dividends paid totaled $8.97B, and its share count decreased 1.8% over 5 years.
Valuation and performance
At a last close of $10.55 on October 16, 2026, Ericsson had a market capitalization of $34.24B and an enterprise value of $30.66B. The stock trades at a trailing P/E of 17.0x and a forward P/E of 18.0x, below the median of its US-listed Technology peers at 28.1x and 18.8x, respectively. Its enterprise value-to-EBITDA ratio of 7.0x is lower than the peer median of 16.6x, and its price-to-sales ratio is 1.4x versus the peer median of 2.8x. Over the past year, ERIC returned 14.8% compared to 16.8% for the S&P 500, while its 5-year return of 4.9% trailed the index's 83.0% gain.
ERIC dividend
Ericsson pays a forward annual dividend of $0.32 per share, translating to a dividend yield of 3.03% with a payout ratio of 29.4%. The company distributes dividends on a semiannual frequency and has paid dividends for 22 consecutive years. Over the past 5 years, the dividend grew at an annualized rate of 11.3%. The most recent ex-dividend date was September 29, 2026.
What analysts expect
Wall Street coverage comprises 0 Strong Buy, 0 Buy, 3 Hold, 2 Sell, and 2 Strong Sell ratings. The mean price target is $9.47, representing a 10.3% discount to the last close of $10.55. For the current fiscal year ending December 31, 2026, analysts estimate revenue of $229.58B and EPS of $0.67, representing a 33.3% decline in EPS. For the next fiscal year, 7 analysts project revenue of $233.85B and EPS of $0.63. Ericsson has beat EPS estimates in 3 of the last 4 quarters.
Key risks and what to watch
- A 46.8% year-over-year drop in latest quarter earnings highlights near-term earnings volatility.
- Current fiscal year EPS is projected to decline 33.3% to $0.67, with a further 5.1% decline estimated for the next fiscal year.
- Operating margin was 0.0% over the trailing twelve months, down from 13.8% in FY2025.
- The stock returned 4.9% over the past 5 years, lagging the S&P 500 return of 83.0%.
AI-generated research summary. Written with AI from Quotelinks data as of October 16, 2026 and checked so every figure matches that data. For information only, not investment advice. Disclaimer
About this ERIC AI stock analysis
This page is an AI-written research summary of Telefonaktiebolaget LM Ericsson (publ) (ERIC). The text was generated on October 30, 2026 from Quotelinks data as of October 16, 2026 (company profile, annual results, latest balance sheet, valuation, price performance and analyst estimates). An automatic check rejects any draft that contains a figure not found in that data. It is not investment advice; verify figures on the linked tabs before making decisions.
Related: ERIC income statement, ERIC balance sheet, ERIC key metrics, ERIC analyst forecast, ERIC chart. See the ERIC stock overview for the latest quote and news.
ERIC AI stock analysis FAQ
What is Ericsson's dividend yield and payment frequency?
Ericsson pays an annual forward dividend of $0.32 per share, which equates to a 3.03% dividend yield. Payments are distributed on a semiannual basis, supported by a 29.4% payout ratio and a 22-year track record of consecutive payments.
How does Ericsson's valuation compare to technology peers?
Ericsson trades at a trailing P/E of 17.0x and an EV/EBITDA of 7.0x. Both metrics are lower than the median of its US-listed Technology peers, which stand at 28.1x trailing P/E and 16.6x EV/EBITDA.
What does Ericsson's balance sheet look like?
As of September 30, 2026, Ericsson had $59.46B in cash and short-term investments versus $39.52B in total debt, resulting in $19.94B in net cash. Its current ratio was 1.16 and its debt-to-equity ratio was 0.35.
What are analysts forecasting for Ericsson's earnings and stock price?
Analysts forecast current fiscal year EPS of $0.67 and revenue of $229.58B, followed by next fiscal year EPS of $0.63. The mean price target across analysts is $9.47, which is 10.3% below its last close of $10.55.