Latest Ratios: P/E Ratio 13.0x · EV/EBITDA 9.2x · ROE 26.3%. (1996–2025 historical series)
Price-based multiples — how expensive the stock is relative to earnings, sales, book value, and cash flow
| Metric | TTM | FY 2025 | FY 2024 | FY 2023 | FY 2022 | FY 2021 | FY 2020 | FY 2019 | FY 2018 | FY 2017 | FY 2016 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Market Cap | $35.8B | $32.3B | $26.9B | $21.0B | $19.5B | $36.2B | $39.7B | $29.1B | $29.4B | $22.2B | $19.3B |
| Enterprise Value | $36.0B | $34.4B | $28.6B | $40.1B | $23.3B | $23.3B | $35.6B | $31.6B | $24.1B | $19.3B | $8.9B |
| P/E Ratio → | 13.05 | 1.21 | 1343.33 | — | 1.03 | 1.52 | 2.55 | 13.72 | — | — | 10.60 |
| P/S Ratio | 1.55 | 0.14 | 0.10 | 0.08 | 0.07 | 0.15 | 0.19 | 0.13 | 0.13 | 0.11 | 0.08 |
| P/B Ratio | 3.16 | 0.29 | 0.29 | 0.22 | 0.15 | 0.34 | 0.47 | 0.37 | 0.33 | 0.22 | 0.14 |
| P/FCF | 12.10 | 1.13 | 0.59 | 5.70 | 0.73 | 0.97 | 1.83 | 2.58 | 5.30 | 3.95 | 2.29 |
| P/OCF | 11.14 | 1.04 | 0.56 | 3.08 | 0.62 | 0.88 | 1.54 | 1.80 | 3.05 | 2.36 | 1.29 |
P/E links to full P/E history page with 30-year chart
Enterprise-value multiples — capital-structure-neutral measures of total business value
| Metric | TTM | FY 2025 | FY 2024 | FY 2023 | FY 2022 | FY 2021 | FY 2020 | FY 2019 | FY 2018 | FY 2017 | FY 2016 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| EV / Revenue | — | 0.15 | 0.11 | 0.16 | 0.08 | 0.10 | 0.17 | 0.14 | 0.11 | 0.10 | 0.04 |
| EV / EBITDA | 9.19 | 0.91 | 1.44 | 1.51 | 0.59 | 0.56 | 1.09 | 1.13 | 1.55 | — | 0.37 |
| EV / EBIT | 11.29 | 0.89 | 4.28 | — | 0.87 | 0.71 | 1.34 | 2.87 | 48.13 | — | 1.48 |
| EV / FCF | — | 1.21 | 0.62 | 10.90 | 0.87 | 0.63 | 1.64 | 2.80 | 4.34 | 3.43 | 1.06 |
Margins and return-on-capital ratios measuring operating efficiency
Full margin charts and quarterly trend are on the Earnings History page
| Metric | TTM | FY 2025 | FY 2024 | FY 2023 | FY 2022 | FY 2021 | FY 2020 | FY 2019 | FY 2018 | FY 2017 | FY 2016 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Gross Margin | 48.1% | 48.1% | 44.9% | 39.6% | 41.8% | 43.5% | 40.6% | 37.5% | 35.2% | 24.6% | 30.6% |
| Operating Margin | 13.8% | 13.8% | 3.6% | 6.8% | 11.3% | 14.0% | 12.7% | 9.7% | 4.9% | -6.9% | 6.0% |
| Net Profit Margin | 12.0% | 12.0% | 0.0% | -10.0% | 6.9% | 9.8% | 7.5% | 1.0% | -3.1% | -15.9% | 0.8% |
| Metric | TTM | FY 2025 | FY 2024 | FY 2023 | FY 2022 | FY 2021 | FY 2020 | FY 2019 | FY 2018 | FY 2017 | FY 2016 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| ROE | 26.3% | 26.3% | 0.0% | -22.0% | 15.9% | 24.9% | 18.9% | 2.5% | -7.2% | -26.5% | 1.3% |
| ROA | 9.3% | 9.3% | 0.0% | -7.6% | 5.8% | 8.2% | 5.7% | 0.8% | -2.5% | -11.4% | 0.6% |
| ROIC | 22.3% | 22.3% | 6.6% | 10.2% | 20.3% | 29.5% | 24.2% | 19.1% | 8.9% | -9.1% | 8.2% |
| ROCE | 18.4% | 18.4% | 5.4% | 8.8% | 16.1% | 20.3% | 16.6% | 13.1% | 6.4% | -7.6% | 7.3% |
Solvency and debt-coverage ratios — lower is generally safer
| Metric | TTM | FY 2025 | FY 2024 | FY 2023 | FY 2022 | FY 2021 | FY 2020 | FY 2019 | FY 2018 | FY 2017 | FY 2016 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Debt / Equity | 0.42 | 0.42 | 0.49 | 0.56 | 0.32 | 0.38 | 0.46 | 0.58 | 0.38 | 0.34 | 0.19 |
| Debt / EBITDA | 1.22 | 1.22 | 2.30 | 2.05 | 1.05 | 0.98 | 1.21 | 1.66 | 2.17 | — | 1.13 |
| Net Debt / Equity | — | 0.02 | 0.02 | 0.20 | 0.03 | -0.12 | -0.05 | 0.03 | -0.06 | -0.03 | -0.07 |
| Net Debt / EBITDA | 0.06 | 0.06 | 0.08 | 0.72 | 0.10 | -0.31 | -0.13 | 0.09 | -0.34 | — | -0.43 |
| Debt / FCF | — | 0.07 | 0.04 | 5.20 | 0.14 | -0.35 | -0.19 | 0.21 | -0.96 | -0.52 | -1.23 |
| Interest Coverage | 13.55 | 13.55 | 1.80 | -5.76 | 13.62 | 17.95 | 13.40 | 4.83 | 0.24 | -23.68 | 3.43 |
Short-term solvency ratios and asset-utilisation metrics
| Metric | TTM | FY 2025 | FY 2024 | FY 2023 | FY 2022 | FY 2021 | FY 2020 | FY 2019 | FY 2018 | FY 2017 | FY 2016 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Current Ratio | 1.29 | 1.29 | 1.17 | 1.20 | 1.19 | 1.38 | 1.31 | 1.32 | 1.45 | 1.54 | 1.85 |
| Quick Ratio | 1.08 | 1.08 | 0.96 | 0.92 | 0.88 | 1.10 | 1.06 | 1.05 | 1.19 | 1.28 | 1.52 |
| Cash Ratio | 0.51 | 0.51 | 0.43 | 0.35 | 0.32 | 0.53 | 0.44 | 0.44 | 0.41 | 0.43 | 0.53 |
| Asset Turnover | — | 0.80 | 0.87 | 0.81 | 0.79 | 0.80 | 0.76 | 0.81 | 0.79 | 0.74 | 0.82 |
| Inventory Turnover | 4.92 | 4.92 | 5.25 | 4.17 | 3.51 | 3.89 | 4.31 | 4.56 | 4.76 | 5.81 | 5.18 |
| Days Sales Outstanding | — | 104.12 | 95.87 | 104.33 | 101.69 | 104.20 | 121.36 | 113.31 | 144.07 | 153.41 | 137.98 |
Earnings, FCF, buyback, and dividend yields — total returns to shareholders
Full dividend history and growth charts are on the Dividend History page
| Metric | TTM | FY 2025 | FY 2024 | FY 2023 | FY 2022 | FY 2021 | FY 2020 | FY 2019 | FY 2018 | FY 2017 | FY 2016 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Dividend Yield | 2.6% | 27.8% | 35.0% | 40.7% | 43.2% | 20.0% | 13.4% | 14.7% | 12.0% | 15.1% | 66.8% |
| Payout Ratio | 33.6% | 33.6% | 44984.3% | — | 44.5% | 30.4% | 34.3% | 200.2% | — | — | 702.7% |
| Metric | TTM | FY 2025 | FY 2024 | FY 2023 | FY 2022 | FY 2021 | FY 2020 | FY 2019 | FY 2018 | FY 2017 | FY 2016 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings Yield | 7.7% | 82.9% | 0.1% | — | 97.1% | 66.0% | 39.2% | 7.3% | — | — | 9.4% |
| FCF Yield | 8.3% | 88.4% | 170.8% | 17.5% | 136.9% | 102.9% | 54.8% | 38.7% | 18.9% | 25.3% | 43.7% |
| Buyback Yield | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.1% | 0.1% |
| Total Shareholder Yield | 2.6% | 27.8% | 35.0% | 40.7% | 43.2% | 20.0% | 13.4% | 14.7% | 12.0% | 15.2% | 66.9% |
| Shares Outstanding | — | $3.3B | $3.3B | $3.3B | $3.3B | $3.3B | $3.3B | $3.3B | $3.3B | $3.3B | $3.3B |
Cyclical Carrier CAPEX Exposure
According to current market data, Ericsson trades at a P/E of 13.32, which appears to discount the company's long-term growth potential in favor of its current status as a cyclical hardware provider, contrasting sharply with the premium multiples assigned to broader enterprise-focused technology peers in the sector.
The forward P/E of 1.86 suggests that the market is pricing in significant earnings volatility or a potential reset in profitability expectations. Investors should monitor whether the current valuation multiple remains compressed due to the ongoing transition from legacy hardware to software-defined network services.
As reported in recent financial statements, Ericsson's ROIC has fluctuated between 1.5% and 8.2% over the last ten quarters, indicating that the company's ability to compound capital is currently hampered by the lumpy nature of its IPR licensing revenue and the cyclicality of global network infrastructure deployments.
The inconsistent ROIC trend suggests that management's capital allocation, particularly regarding large-scale acquisitions, has yet to yield the expected returns on invested capital. This volatility warrants further investigation into whether the company can achieve sustained margin expansion through its software-led enterprise strategy.
Based on the provided data, Ericsson's cash conversion cycle reached 104 days in 2026Q1, reflecting a persistent challenge in managing working capital efficiency as the company navigates complex, project-based billing cycles that often result in significant fluctuations in accounts receivable and inventory turnover across its global operations.
The elevated DSO of 111 days suggests that the company may be granting extended payment terms to major telecom carriers, which ties up significant liquidity. This inefficiency appears to be a structural byproduct of the industry's reliance on large, multi-year infrastructure contracts rather than a temporary operational failure.
As evidenced by recent filings, Ericsson maintains a disciplined debt-to-equity ratio of 0.38, which provides a robust buffer against the cyclical downturns inherent in the telecommunications equipment industry and ensures that the company remains well-positioned to fund ongoing R&D requirements despite current revenue contraction trends.
The interest coverage ratio of 3.10 in 2026Q1 indicates that debt service remains manageable, though investors should monitor how this metric evolves if operating margins continue to face pressure from regional sales mix shifts. The company's conservative balance sheet appears to be a deliberate strategy to mitigate the risks associated with its high fixed-cost base.
The P/E ratio is frequently misapplied to Ericsson, as it obscures the significant impact of non-recurring IPR licensing settlements and large-scale asset impairments that distort net income, making it a poor indicator of the company's underlying operational health or its true cash-generating capacity in a cyclical environment.
Analysts should instead prioritize EV/EBITDA or free cash flow yield to better assess the company's core profitability, as these metrics are less sensitive to the accounting volatility inherent in the firm's current business model. Relying solely on P/E may lead to an inaccurate assessment of the company's valuation relative to its long-term strategic pivot.
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Quick answers to the most common questions about buying ERIC stock.
Telefonaktiebolaget LM Ericsson (publ)'s current P/E ratio is 13.0x. The historical average is 4.2x. This places it at the 96th percentile of its historical range.
Telefonaktiebolaget LM Ericsson (publ)'s current EV/EBITDA is 9.2x. This enterprise value multiple compares the company's total value (equity + debt - cash) to its EBITDA. The historical average is 1.3x.
Telefonaktiebolaget LM Ericsson (publ)'s return on equity (ROE) is 26.3%. This is above the typical threshold of 15-20% considered good for most companies. The historical average is 7.3%.
Based on historical data, Telefonaktiebolaget LM Ericsson (publ) is trading at a P/E of 13.0x. This is at the 96th percentile of its historical P/E range. Compare with industry peers and growth rates for a complete picture.
Telefonaktiebolaget LM Ericsson (publ)'s current dividend yield is 2.57% with a payout ratio of 33.6%.
Telefonaktiebolaget LM Ericsson (publ) has 48.1% gross margin and 13.8% operating margin. Operating margin between 10-20% is typical for established companies.
Telefonaktiebolaget LM Ericsson (publ)'s Debt/EBITDA ratio is 1.2x, indicating moderate leverage. A ratio below 2x is generally considered financially healthy.