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ERIC

9/9 Score

Telefonaktiebolaget LM Ericsson (publ)

Analysis Date: February 16, 2026

Telefonaktiebolaget LM Ericsson (publ), together with its subsidiaries, provides communication infrastructure, services, and software solutions to the telecom and other sectors. It operates through four segments: Networks, Digital Services, Managed Services, and Emerging Business and Other. The Networks segment offers radio access network solutions for various network spectrum bands, including integrated high-performing hardware and software. This segment also provides integrated antenna and transport solutions; and a range of service portfolio covering network deployment and support. The Digital Services segment offers software-based solutions for business support systems, operational support systems, communication services, core networks, and cloud infrastructure. The Managed Services segment provides networks and IT managed, network design and optimization, and application development and maintenance services to telecom operators. The Emerging Business and Other segment includes emerging businesses comprising Internet of Things; iconectiv; Cradlepoint that offers wireless edge WAN 4G and 5G enterprise solutions; and Red Bee Media, MediaKind, and other new businesses. It operates in North America, Europe and Latin America, the Middle East and Africa, South East Asia, Oceania, India, North East Asia, and internationally. Telefonaktiebolaget LM Ericsson (publ) was founded in 1876 and is headquartered in Stockholm, Sweden.

Buffettology Criteria

All 9 of 9 criteria passed

  • High ROE

    Return on Equity > 12%

    Value: 29.6%

  • High ROIC

    Return on Invested Capital > 9%

    Value: 14.0%

  • Cash Machine

    FCF / Assets > 5%

    Value: 10.2%

  • Fair Valuation

    Earnings Yield > 3.5%

    Value: 8.7%

  • Share Buybacks

    Share Count is Dropping

    Value: 0.0%

  • Defensible Moat

    Gross Profit Margin > 40%

    Value: 48.1%

  • Simple Business

    Not in a speculative sector (e.g., Biotech)

    Value: Technology

  • Conservative Debt

    Debt to Equity < 1.5

    Value: 0.42x

  • Consistent Growth

    5-Year Growth is Positive

    Value: 71.1%

Analysis Summary

Ericsson appears to be a business that understands how to put capital to work effectively, evidenced by its strong ROE and ROIC. The company sports a healthy balance sheet and a durable moat, which gives us confidence it can navigate the ever-changing technological landscape. While consistent growth is a positive sign, we'll be keeping an eye on the cash conversion to ensure it remains robust over the long haul.

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