Ericsson American Depositary Shares (ERIC)

FairStock Score: 66/100 — STEADY

Key Financials

Strengths

• Generates $29.5 billion in annual free cash flow (78.4% yield on market cap)
• High return on equity of 27.0% demonstrating efficient capital deployment
• Conservative balance sheet with debt-to-equity of just 0.38, providing financial flexibility
• Attractive 2.8% dividend yield providing steady income returns
• FairStock composite score of 73/100 places it in the top tier across value, quality, and momentum factors

Concerns

• Revenue declining at 10.3% year-over-year signals potential demand weakness or market share loss
• Altman Z-Score of 0.4 places it in the financial distress zone—elevated bankruptcy risk

AI Analysis

Ericsson American Depositary Shares is a mid-cap technology company valued at $37.6 billion. From a quality standpoint, Ericsson shows solid Piotroski F-Score of 6/9 and distressed Altman Z-Score of 0.4 warrants caution. On valuation, the stock is attractively valued at 13.6x earnings, with offers a 53% margin of safety vs Graham Number of $24. Growth dynamics show revenue growing at -10.3% and profit growth of -78.6%. The 2.8% dividend yield adds an income component for patient holders. Our composite FairStock Score of 73/100 reflects above-average fundamentals overall. This combination of reasonable valuation, solid returns, and conservative leverage makes it worth a closer look for value-oriented portfolios.

Bull Case

The market underappreciates Ericsson's consistent 27% ROE at just 14x earnings—a re-rating toward sector peers could unlock 30-50% upside. With $29.5 billion in annual free cash flow (78.4% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.

Bear Case

Macro headwinds or sector-specific disruption could pressure margins, particularly if competitive intensity increases in the technology space. Sluggish -10% growth in a large-cap company leaves the stock vulnerable to de-rating if the market rotates toward higher-growth opportunities.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer