November 14, 2024
Top 10 Stock Ericsson Strong Buy Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: Ericsson – Top 10 Stock in Optionsmäklarna Stockholm Stock Exchange Stockholm Index OMX 30
Ericsson is listed as a top 10 stock on November 14, 2024 in the market index OMX 30 because of its high performance in at least one of the Obermatt investment strategies. As three out of four consolidated Obermatt Ranks exhibit excellent performance, it is a solid investment where the risk of paying too much for the shares is low. Based on the Obermatt 360° View of 83 (top 83% performer), Obermatt assesses an overall strong buy recommendation for Ericsson on November 14, 2024.
Snapshot: Obermatt Ranks
| Country | Sweden |
| Industry | Communications Equipment |
| Index | Dividends Europe, Employee Focus EU, Renewables Users, Recycling, NASDAQ, OMX 30 |
| Size class | XX-Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View Ericsson Strong Buy
| 360 METRICS | November 14, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 76 |
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| GROWTH | ||||||||
| GROWTH | 90 |
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| SAFETY | ||||||||
| SAFETY | 18 |
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| SENTIMENT | ||||||||
| SENTIMENT | 79 |
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| 360° VIEW | ||||||||
| 360° VIEW | 83 |
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ANALYSIS: With an Obermatt 360° View of 83 (better than 83% compared with alternatives) for 2024, overall professional sentiment and financial characteristics for the stock Ericsson are very positive. The 360° View is based on consolidating four consolidated indicators, with all but one indicator above average for Ericsson. The consolidated Value Rank has an attractive rank of 76, which means that the share price of Ericsson is on the lower side compared with the typical size in indicators such as revenues, profits, and invested capital. This means the stock price is lower than for 76% of alternative stocks in the same industry. The consolidated Growth Rank has a good rank of 90, which means that the company experiences above-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth, as well as stock returns. In addition, professional market sentiment is above average compared with other stock investment alternatives with a Sentiment Rank of 79. But the company’s financing is risky with a Safety rank of 18. This means 82% of comparable companies have a safer financing structure than Ericsson. ...read more
RECOMMENDATION: With a consolidated 360° View of 83, Ericsson is better positioned than 83% of all alternative stock investment opportunities based on the Obermatt Method. As three out of four consolidated Obermatt Ranks exhibit excellent performance, such as good value (Value Rank of 76), above-average growth (Growth Rank of 90), and positive market sentiment in the professional investor community (Sentiment Rank of 79), it is a solid stock investment where the risk of paying too much for the shares is limited, and disappointments are less likely, unless information not publicly available. Only the company financing structure is on the riskier side (Safety Rank of 18), but that would also mean better returns for shareholders if things work out well. Good value is sometimes an indication that the company's future is challenging. If they have been growing above average and are still a good value, it may indicate that this will not continue. We recommend evaluating whether the future of Ericsson is as difficult as the low price of the stock, despite good growth and positive professional investor sentiment, suggests. Since the professional community is optimistic, you might have less to worry about, and the stock is just not sufficiently visible right now, which may indicate good timing. ...read more
Sentiment Strategy: Professional Market Sentiment for Ericsson very positive
ANALYSIS: With an Obermatt Sentiment Rank of 79 (better than 79% compared with alternatives) for 2024, overall professional sentiment and engagement for the stock Ericsson is very positive. The Sentiment Rank is based on consolidating four sentiment indicators, with all but one indicator above average for Ericsson. Analyst Opinions are at a rank of 5 (worse than 95% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. But they are changing their opinions! Analyst Opinions Change has a rank of 83, which indicates a shift in stock research experts opinions for the better. In other words, they are getting more optimistic about stock investments in Ericsson. Even better, the Professional Investors rank is 84, meaning that professional investors hold more stock in this company than in 84% of alternative investment opportunities. Pros tend to favor investing in this company. Furthermore, Market Pulse has a rank of 62, which means that the current professional news and professional social networks are upbeat when discussing this company (more positive news than for 62% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 79 (more positive than 79% compared with investment alternatives), Ericsson has a reputation among professional investors that is significantly higher than that of its competitors. While analysts are still critical of the company, some are changing their minds. In addition, the professional news channels are optimistic, and many institutional investors have already bought stock in the company. These are encouraging signals, despite the still lower level of analyst recommendations. They may be due to a problematic past, and about to change. The positive sentiment signals are stronger than the negative. ...read more
Value Strategy: Ericsson Stock Price Value at the top
ANALYSIS: With an Obermatt Value Rank of 76 (better than 76% compared with alternatives) for 2024, Ericsson shares are significantly less expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, with three out of four indicators above average for Ericsson. Price-to-Sales (P/S) is 50, which means that the stock price compared with what market professionals expect for future sales is lower than for 50% of comparable companies, indicating a good value concerning Ericsson's revenue size. The same is valid for expected Price-to-Profits (or Price / Earnings, P/E), more favorable than for 65% of alternatives. It is also positive for expected dividend yields with a Dividend Yield rank of 89 (dividends are expected to be higher than 89% of other stocks). But, compared with other companies in the same industry, the Price-to-Book Capital ratio (also referred to as market-to-book ratio) is higher than average, making the stock more expensive. Only 73% of all competitors have an even higher price compared with book capital which puts the Price-to-Capital Rank for Ericsson to 27. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 76, is a buy recommendation based on Ericsson's stock price compared with the company's operational size and dividend yields. A low level of book capital means that the company has a business that is leaner in assets than its competitors. For instance, the company could be leasing its production facilities or be more focussed on intellectual property, such as its brand and software, which is less visible in its book capital. If that is the case, the three good value ranks for Sales, Profits, and Dividends are reliable indicators for the stock price value. ...read more
Growth Strategy: Ericsson Growth Momentum high
| GROWTH METRICS | November 14, 2024 | |||||||
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| REVENUE GROWTH | ||||||||
| REVENUE GROWTH | 27 |
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| PROFIT GROWTH | ||||||||
| PROFIT GROWTH | 65 |
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| CAPITAL GROWTH | ||||||||
| CAPITAL GROWTH | 92 |
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| STOCK RETURNS | ||||||||
| STOCK RETURNS | 95 |
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| CONSOLIDATED RANK: GROWTH | ||||||||
| CONSOLIDATED RANK: GROWTH | 90 |
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ANALYSIS: With an Obermatt Growth Rank of 90 (better than 90% compared with alternatives) for 2024, Ericsson shows one of the highest growth dynamics in its industry. Investors also speak of high momentum. The Growth Rank is based on consolidating four value indicators, with all but one indicator above average for Ericsson. Profit Growth has a rank of 65 which means that currently professionals expect the company to grow its profits more than 65% of its competitors. The same is valid for capital growth and stock returns. Capital Growth has a rank of 92, and Stock Returns has a rank of 95 which means that the stock returns have recently been above 95% of alternative investments. Only revenue growth is low with a Sales Growth has a rank of 27 (73% of its competitors are better). ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 90, is a buy recommendation for growth and momentum investors. The many positive growth indicators indicate a positive growth momentum with only low revenue growth. That can also be attributed to divestments or the sale of unprofitable businesses. If that is the reason, overall growth is well on track to making this stock attractive for growth investors. ...read more
Safety Strategy: Ericsson Debt Financing Safety risky
| SAFETY METRICS | November 14, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 30 |
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| REFINANCING | ||||||||
| REFINANCING | 25 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 51 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 18 |
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ANALYSIS: With an Obermatt Safety Rank of 18 (better than 18% compared with alternatives), the company Ericsson has much riskier financing practices than comparable other companies, which means that their overall debt burden is significantly above the industry average. This doesn't mean that the business of Ericsson is also risky, it only means that the company is on the riskier side in respect to bankruptcy in case things turn sour, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with just one indicator above average for Ericsson. Liquidity is at 51, meaning the company generates more profit to service its debt than 51% of its competitors. This indicates that the company is safer when it comes to debt service. But Refinancing is riskier at a rank of 25, which means that the portion of the debt that is about to be refinanced is above average. It has more debt in the refinancing stage than 75% of its competitors. Leverage is also high at a rank of 30, which means that the company has an above-average debt-to-equity ratio. It has more debt than 70% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 18 (worse than 82% compared with alternatives), Ericsson has a financing structure that is significantly riskier than that of its competitors. High Leverage (a low Obermatt Leverage Rank) is good in good times, because it usually indicates that shareholders get higher returns. The good Liquidity performance of the company is an indicator that this is the case. However, if you expect an economic downturn, you may stay clear of this stock because they have an above-average debt level that needs refinancing soon. ...read more
Combined financial peformance: Ericsson Top Financial Performance
| COMBINED PERFORMANCE | November 14, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 76 |
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| GROWTH | ||||||||
| GROWTH | 90 |
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| SAFETY | ||||||||
| SAFETY | 51 |
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| COMBINED | ||||||||
| COMBINED | 78 |
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ANALYSIS: With an Obermatt Combined Rank of 78 (better than 78% compared with investment alternatives), Ericsson (Communications Equipment, Sweden) shares have much better financial characteristics than comparable stocks. Shares of Ericsson are a good value (attractively priced) with a consolidated Value Rank of 76 (better than 76% of alternatives), show above-average growth (Growth Rank of 90) but are riskily financed (Safety Rank of 18), which means above-average debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 78, is a strong buy recommendation based on Ericsson's financial characteristics. As the company Ericsson's key financial metrics exhibit excellent performance in two areas, such as good value (Obermatt Value Rank of 76) and above-average growth (Obermatt Growth Rank of 90), it could be argued that the risk-taking in financing (Obermatt Safety Rank of only 18) indicates that the company is optimistic about the future and sees debt as an opportunity to boost returns. More debt means more shareholder returns if everything goes well. However, higher debt burdens are risky when interest rates rise or the business deteriorates in a crisis. If you believe the company's future is market-typical or even better, this could be an argument for a share purchase. ...read more
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