ERICTelefonaktiebolaget LM Ericsson (publ)
Is the business good?
The checks split: nothing decisive, though earnings fully cash-backed (1.1×).
Operating profit is fully backed by cash.
Positive operating leverage, operating profit is growing faster than sales, so margins widen as the business scales.
A balanced mix of margins, efficiency, and leverage. ROE 26% = margin × turnover × leverage.
Unless marked, from derived.
Where this answer is blind. The F-score rewards improvement, so an already-elite company can score mid-pack.
How good a business is ERIC?
Telefonaktiebolaget LM Ericsson (publ) earns 31% on the capital it employs against a 9.0% cost of capital, so the business is worth more the bigger it gets.
Return on invested capital · cost of capital 9.0% · 22 points above what the capital costs: growth creates value
- Operating margin
- 16%
Operating margin · Communication Equipment median 5.0% · fiscal year to FY2025
- Cash conversion
- 1.14×
Cash conversion · operating cash flow covers the operating profit after tax
- Share count, year on year
- +0.09%
Share count, year on year · flat: no meaningful dilution
| Year | Operating margin |
|---|---|
| FY2020 | 12% |
| FY2021 | 14% |
| FY2022 | 10.0% |
| FY2023 | −7.7% |
| FY2024 | 1.7% |
| FY2025 | 16% |
Details›
- Gross marginfiscal year to FY2025
- 48%
- Operating marginfiscal year to FY2025
- 16%
- Net marginfiscal year to FY2025
- 12%
- Free cash flow margin
- 13%
- R&D as % of revenue
- 21%
- Revenue, trailing twelve months
- $236.7B
- Free cash flow, trailing twelve months
- $30.3B
- Net income, trailing twelve months
- $28.4B
- Return on invested capitaloperating profit after tax ÷ debt + equity − cash
- 31%
Margins, capital and share counts from the statements as filed with the SEC; cash conversion is operating cash flow over operating profit after tax.
Communication Equipment
Ranks #4 of 20 by RyuScore