Telefonaktiebolaget LM Ericsson (publ) (ERIC): What Does Valuation Ratios Tell Us?


Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC) saw an upside of 2.82% to close Monday at $5.84 after adding $0.16 on the day. The 5-day average trading volume is 15,773,260 shares of the company’s common stock. It has gained $6.18 in the past week and touched a new high 2 times within the past 5 days. An average of 10,747,685 shares of the company has been traded in the last 20 days, and the 50-day average volume stands at 10,416,904.

ERIC’s 1-month performance is 1.39% or -$0.05 on its low of $5.50 reached on 01/20/23. The company’s shares have touched a 52-week low of $5.16 and high of $12.78, with the stock’s rally to the 52-week high happening on 01/12/23. However, the current price is down -54.30% from the 52-week high price.

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Valuation Metrics

ERIC stock has a beta of 0.57. Moving on to other valuation ratios, the trailing price-to-sales (P/S) ratio is 0.83 while the price-to-book (PB) in the most recent quarter is 1.45, with the price to cash flow ratio at 8.57.

Telefonaktiebolaget LM Ericsson (publ)’s quick ratio for the period ended December 30 was 0.80, with the current ratio over the same period at 1.20. As well, the company’s long term debt to equity for the quarter ending December 30 was 0.25, while the total debt to equity was 0.31. In terms of profitability, the gross margin trailing 12 months is 42.40%. The trailing 12-month EBITDA margin is 17.11% while for the period ending December 30, Telefonaktiebolaget LM Ericsson (publ)’s operating margin was 12.70%. The firm’s gross profit as reported stood at $11.75 billion against revenue of $27.09 billion.

Earnings Surprise

For the quarterly period ending December 30 this year, Telefonaktiebolaget LM Ericsson (publ)’s cash and short-term investments amounted to $685.74 million. Net income and sales went up compared to those figures reported in the previous quarter. Net income grew 22.96% to $2.44 billion, while revenue of $0.0 was 100.0% off the previous quarter. Analysts expected ERIC to announce $0.21 per share in earnings in its latest quarter, but it posted $0.21, representing a 0.00% surprise. EBITDA for the quarter stood at more than $895.41 million.

Let’s look briefly at Telefonaktiebolaget LM Ericsson (publ) (ERIC) price momentum from a technical analysis perspective. The 9-day relative strength index as at close on 23 January was 42.90% to suggest the stock is trending Neutral, with historical volatility in this time period at 46.07%.

The stock’s 5-day moving average is $5.91, reflecting a -3.63% or -$0.22 change from its current price. ERIC is currently trading unch above its 20-day SMA, -18.21% above its 100-day SMA. However, the stock’s current price level is away from the SMA50 by +4.29% and SMA200 by-38.78%.

Stochastic %K and %D was 26.72% and 30.66% and the average true range (ATR) pointed at 0.20. The RSI (14) points at 44.49%, while the 14-day stochastic is at 36.56% with the period’s ATR at 0.19. The stock’s 9-day MACD Oscillator is pointing at -0.18 and -0.19 on the 14-day charts.

Analyst Ratings

In the most recent analyst report for Telefonaktiebolaget LM Ericsson (publ) (NASDAQ: ERIC), Exane BNP Paribas downgraded it to a Neutral rating. They previously had an Outperform rating on the stock. Analysts offering their rating for ERIC stock have a consensus rating for the stock as Hold. Currently, 4 brokerage advisors rate ERIC as a “sell,”, while 13 advise that investors “Hold.” 2 analysts have rated the stock as underweight. 4 rates the stock as overweight while 7 have offered a “buy” rating.

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

Analysts have a consensus price target ranging from a low of $4.85 and a high of $10.28, with their median price target at $7.35. Looking at these predictions, the average price target given by analysts is for Telefonaktiebolaget LM Ericsson (publ) (ERIC) stock is $7.22.


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