How Telefonaktiebolaget LM Ericsson (publ) (ERIC) Works From A Technical Perspective

Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC) finished Wednesday with an addition of $0.24 to close at $12.12, an upside of 2.02 percent. An average of 6,540,280 shares of common stock have been traded in the last five days. There was a gain of $0.78 in the past week. The last 20 days have seen an average of 6,453,815 shares traded, while the 50-day average volume stands at 4,811,664.

ERIC stock has increased by 3.59% in the last month. The company shares reached their 1-month lowest point of $10.88 on 09/20/21. With the stock rallying to its 52-week high on 01/27/21, shares of the company touched a low of $10.53 and a high of $15.31 in 52 weeks. In spite of this, the price is down -20.86% from the 52-week high.


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Valuation Metrics

Telefonaktiebolaget LM Ericsson (publ) (ERIC) has a trailing price-to-earnings (P/E) ratio of 17.93, which compares with the 23.30 for the broader industry and 37.24 for the sector. In the last five years, Telefonaktiebolaget LM Ericsson (publ)’s PE ratio has ranged between 2985.81 and 12.96. The stock’s beta is 0.33. Other valuation ratios to consider include the trailing price-to-sales (P/S) ratio at 1.53, the price-to-book (PB) ratio at 3.80, and the price-to-cash flow ratio at 20.25.

Telefonaktiebolaget LM Ericsson (publ) pays a $0.15 dividend per share annually. It offers a dividend yield of 1.24%. The company has a payout ratio of 141.40%. The company’s most recent quarterly dividend payment took place on Apr. 1, and it was $0.08 a share, representing a up of 15.0 from $0.0680 last year. Its dividend has been increased for the last 2 consecutive years with the latest increase dividend $0.0120 reported on Wednesday February 24 2021. Dividends have grown by 43.11% each year over the last three years.

Telefonaktiebolaget LM Ericsson (publ) will next go ex-dividend on 1-Apr. The next dividend payment Telefonaktiebolaget LM Ericsson (publ) will make is expected to be $0.098.

The quick ratio of Telefonaktiebolaget LM Ericsson (publ) for the three months ended June 29 was 1.00, and the current ratio was 1.30, indicating that the company is able to meet its debt obligations. Further, the company has a long term debt to equity ratio of 0.31 and a total debt to equity ratio of 0.46 for the quarter ending June 29. On the profitability front, the trailing 12-month gross margin is 42.40% against a 5-year average of 32.6%. Telefonaktiebolaget LM Ericsson (publ)’s EBITDA margin for the year ending June 29 is 15.75%, while its operating margin for the same period stands at 13.30%. Its gross profit as reported stood at $10.22 billion compared to revenue of $25.33 billion.

For investors, determining the potential profitability of the investment also depends on the performance of the company’s management. In the past 12 months, Telefonaktiebolaget LM Ericsson (publ)’s return on assets was 7.20%, compared to -1.4% over the last five years. In the past year, the return on investment has been 14.40%, and the 5-year average is -1.9%. Meanwhile, the return on equity (ROE) for the past 12 months has been 22.40% and the 5-year average holds at -2.3%. For the broader industry, ROE averaged 3.62 over the past year.

Earnings Surprise

The analyst consensus anticipated Telefonaktiebolaget LM Ericsson (publ)’s latest quarter earnings to come in at $0.16 per share, but it turned out to be $0.14, a -12.50% surprise. For the quarter, EBITDA amounted to -$6.18 billion. At the end of the quarter ending June 29, Telefonaktiebolaget LM Ericsson (publ)’s stock balance sheet showed total liabilities of 22.51 billion.

Technical Picture

From a technical analysis perspective, let’s take a brief look at Telefonaktiebolaget LM Ericsson (publ) (ERIC) price momentum. RSI 9-day as of the close on 13 October was 74.07%, suggesting the stock is Overbought, with historical volatility in this time frame at 14.67%.

As of today, ERIC’s price is $11.83 +6.88% or $0.78 from its 5-day moving average. ERIC is currently trading +4.39% higher than its 20-day SMA and -10.42% lower than its 100-day SMA. However, the stock’s current price level is +3.77% above the SMA50 and +2.97% above the SMA200.

The stochastic %K and %D were 94.15% and 89.96%, respectively, and the average true range (ATR) was 0.22. With the 14-day stochastic at 99.51% and the average true range at 0.22, the RSI (14) stands at 65.83%. The stock has reached 0.39 on the 9-day MACD Oscillator while the 14-day reading was at 0.45.

Analyst Ratings

Argus downgraded Telefonaktiebolaget LM Ericsson (publ) (NASDAQ: ERIC) to a a Hold rating in its most recent analyst report. Previously, the stock was rated as a a Buy.The consensus rating for Telefonaktiebolaget LM Ericsson (publ) (ERIC) among analysts is Overweight. According to current brokerage recommendations, 1 brokerage firm advise that investors sell ERIC, while 5 suggest investors hold. There are 1 analyst who rate the stock as underweight. The stock is rated overweight by 5 analysts, while 15 others rate it as a “buy”.

What is ERIC’s price target for the next 12 months?

Analysts predict a range of price targets between $10.95 and $20.14, with a median target of $14.93. Taking a look at these predictions, the average price target given by analysts for Telefonaktiebolaget LM Ericsson (publ) (ERIC) stock is $14.89.

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