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what it is
Ericsson sells the gear and software that run 5G and wired telecom networks.
how it gets paid
Last year Eric made $25.7B in revenue. Networks was the main engine at $16.4B, or 64% of sales.
what just happened
Ericsson posted $0.28 a share, above the $0.18 estimate, on $7.5B of revenue.
At a glance
B++ balance sheet — above average — nothing keeping you up at night
35/100 earnings predictability — expect surprises
12.6x trailing p/e — the market's not buying it — or you found a deal
2.8% dividend yield — cash in your pocket every quarter
15.5% return on capital — nothing to write home about
xvary composite: 65/100 — average
What they do
Ericsson sells the gear and software that run 5G and wired telecom networks.
Networks is 64% of 2025 revenue. That is the carrier gear you need before your phone works. Your biggest line is tied to telecom buying, not consumer trends. Ericsson also posts a 17.0% operating margin and a 15.5% return on capital. That means it keeps 17 cents before overhead on every $1 of sales and earns 15.5 cents for every dollar tied up.
How they make money
$25.7B
annual revenue
Networks
$16.4B
Cloud Software and Services
$6.7B
Enterprise and other
$2.6B
The products that matter
builds and upgrades carrier networks
Networks
$16.4B · 64% of revenue
it is the $16.4B core business. If carriers slow spending, most of Ericsson feels it.
64% of rev
runs telecom software and services
Cloud Software and Services
$6.7B · 26% of revenue
this $6.7B segment is the part of the business that looks less like boxes and more like recurring telecom software. At 26% of revenue, it matters — just not enough to carry the company alone.
26% of rev
enterprise connectivity and other
Enterprise and other
$2.6B · 10% of revenue
it is only 10% of sales, which makes it the optionality bucket. Useful if it scales, but too small today to rescue a weak Networks cycle.
10% of rev
Key numbers
$10
18-month target
That is 10% below $11.08, so the stock starts below where it trades now.
12.6x
Trailing P/E
You pay 12.6 years of past earnings for the shares. That is not expensive, but it is not bargain-bin either.
17.0%
Op margin
For every $100 of sales, Ericsson keeps $17 before overhead. That is a real cushion in a slow-growth business.
15.5%
ROIC
Return on capital means profit on money tied up. Ericsson makes 15.5 cents for every dollar invested.
Financial health
B++
strength
- balance sheet grade B++ — above average financial health
- risk rank 3 — safer than 50% of stocks
- price stability 50 / 100
- long-term debt $3.2B (8% of capital)
- net profit margin 9.4% — keeps 9 cents of every dollar in revenue
- return on equity 16% — $0.16 profit for every $1 investors have put in
B++ — functional but not a standout on the balance sheet.
Total return vs. market
You invested $10,000 in ERIC 3 years ago → it's now worth $21,550.
The index would have given you $13,880.
source: institutional data · total return
What just happened
beat estimates
Ericsson posted $0.28 a share, above the $0.18 estimate, on $7.5B of revenue.
Revenue rose 13.95% from the year-ago quarter, and the company cleared consensus by 55.56% on EPS. That is a clean beat, not a coin flip.
$7.5B
revenue
$0.28
eps
47.2%
gross margin
the number that mattered
The 55.6% EPS beat mattered most. $0.28 versus $0.18 means analysts were too low by 10 cents.
-
profits have bounced back nicely at ericsson.
-
most recently, december-quarter earnings of $0.28 per adr more than doubled from the prior-year period and easily beat our estimate of $0.18.as was the case earlier in 2025, results got a big boost from improved operating margins, which have been benefiting from cost-reduction initiatives and increased operating efficiencies.
-
another highlight was the notable pick-up in sales.
-
on an organic basis (excluding currency effects, acquisitions, and other items), the top line was flat through the first nine months of the year, but climbed 6% vs. prior year in the final quarter, led by 12% growth in the cloud software & service segment.
-
we anticipate limited bottom-line growth in 2026.
source: company earnings report, 2026
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What could go wrong
the top risk is carrier spending slowing in Networks.
med
Networks still drives the story
Networks produces $16.4B of revenue, or 64% of the total business.
If mobile operators delay upgrades, most of Ericsson feels it. This is not a diversified software basket. It is one big infrastructure engine with smaller side businesses attached.
med
earnings are not cleanly predictable
The earnings predictability score is 35 / 100.
In human-speak: quarterly results can surprise you. A cheap multiple stays cheap when investors do not trust the cadence.
med
the average long-range target sits below the stock
The 3–5 year target midpoint is $10 against a current price of $11.08.
That does not kill the upside, because the high target is $15. But it does mean the market is already asking for better execution than the midpoint view assumes.
Between 64% revenue exposure to Networks, a 35/100 predictability score, and a $10 target midpoint below the current price, this is a stock that needs operating follow-through more than it needs a better story.
source: institutional data · regulatory filings · risk analysis
Pay attention to
mix
whether Networks stays this dominant
At 64% of revenue, Networks is still the business. If that mix falls because software grows, the stock could deserve a different multiple.
flow
institutional buying streak
Institutions were net buyers for two consecutive quarters, with 140 buyers versus 106 sellers in 4q2025. That is supportive until it stops.
valuation
the gap between price and target midpoint
Current price is $11.08. The 3–5 year midpoint target is $10. You want operations improving faster than consensus, not slower.
calendar
the next earnings report
This snapshot does not include the date. That is thin, and the next print matters because a 35/100 predictability score means the market is waiting for proof, not adjectives.
Analyst rankings
earnings predictability
35 / 100
in human-speak, analysts do not view Ericsson's earnings stream as especially smooth.
risk rank
3
That places the stock around the middle of the pack on risk. Not fragile, not defensive.
price stability
50 / 100
The shares have been average on stability. You are not buying a bunker stock.
source: institutional data
Institutional activity
institutions have been net buying for 2 consecutive quarters — 140 buyers vs. 106 sellers in 4q2025. total institutional holdings: 0.3B shares. net buying for 2 quarters.
source: institutional data
Price targets
3-5 year target range
$6
$14
$11
current price
$10
target midpoint · 10% from current · 3-5yr high: $15 (+35% · 11% ann'l return)
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