Is Ericsson (OM:ERIC B) Pricing Look Reasonable After Strong Multi‑Year Share Price Performance?

Simply Wall St

Sun, February 15, 2026 at 9:10 PM GMT+9 6 min read

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If you are wondering whether Telefonaktiebolaget LM Ericsson is priced attractively today, you are not alone. Many investors are looking past the headlines to what the current share price really implies about value.

The stock last closed at SEK 98.42, with returns of 12.5% over 30 days, 11.5% year to date, 20.0% over 1 year, 85.1% over 3 years and 9.6% over 5 years, while the past 7 days saw a 1.4% decline.

Recent news around Telefonaktiebolaget LM Ericsson has focused on its role in global telecom networks and on how sector sentiment toward network equipment and 5G related spending is shifting. This context helps explain why the share price has seen both periods of strength and short term pullbacks in recent weeks.

On our valuation framework the company scores 4 out of 6 on undervaluation checks, which you can see in detail through our valuation score. Next, we will look at how different methods such as DCF and multiples compare, before finishing with a more comprehensive way to think about what this valuation really means for you.

Telefonaktiebolaget LM Ericsson delivered 20.0% returns over the last year. See how this stacks up to the rest of the Communications industry.

Approach 1: Telefonaktiebolaget LM Ericsson Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model takes estimates of the cash a company could generate in the future and discounts those amounts back to what they might be worth today. It is a way of asking what you might be paying now for the cash the business is expected to produce over time.

For Telefonaktiebolaget LM Ericsson, the model used is a 2 Stage Free Cash Flow to Equity approach based on cash flow projections. The company’s latest twelve month free cash flow sits at about SEK 28.97b. Analysts provide explicit forecasts for the next few years, and Simply Wall St then extrapolates further, with projected free cash flow of SEK 19.47b in 2030 and SEK 17.63b in 2035, all in SEK terms.

When these cash flows are discounted back using this model, the estimated intrinsic value comes out at around SEK 104.14 per share. Compared with the recent share price of SEK 98.42, the DCF suggests the shares trade at roughly a 5.5% discount to this estimate, which is a relatively small gap.

Result: ABOUT RIGHT

Telefonaktiebolaget LM Ericsson is fairly valued according to our Discounted Cash Flow (DCF), but this can change at a moment’s notice. Track the value in your watchlist or portfolio and be alerted on when to act.

Story Continues  

ERIC B Discounted Cash Flow as at Feb 2026

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Telefonaktiebolaget LM Ericsson.

Approach 2: Telefonaktiebolaget LM Ericsson Price vs Earnings

For a profitable business like Telefonaktiebolaget LM Ericsson, the P/E ratio is a straightforward way to think about value, because it links the share price directly to the earnings that shareholders ultimately rely on. In general, higher expected growth and lower perceived risk tend to justify a higher P/E, while lower growth expectations or higher risk usually go with a lower P/E.

Telefonaktiebolaget LM Ericsson currently trades on a P/E of 11.54x. This sits below the Communications industry average of 36.00x and also below the broader peer group average of 74.37x. That comparison can be helpful, but peers often have very different growth profiles, margins, balance sheet strength and sizes, so simple averages can mislead.

Simply Wall St’s Fair Ratio for Telefonaktiebolaget LM Ericsson is 21.70x. This is its proprietary view of what a more appropriate P/E could be after factoring in elements such as earnings growth, the company’s industry, profit margins, market cap and specific risks. Because it adjusts for these business characteristics, the Fair Ratio aims to be more tailored than a basic peer or industry comparison. With the Fair Ratio above the current P/E, the multiple based view points to the shares trading below that tailored estimate of value.

Result: UNDERVALUED

OM:ERIC B P/E Ratio as at Feb 2026

P/E ratios tell one story, but what if the real opportunity lies elsewhere? Start investing in legacies, not executives. Discover our 102 top founder-led companies.

Upgrade Your Decision Making: Choose your Telefonaktiebolaget LM Ericsson Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, which are simple stories that you and other investors build around Telefonaktiebolaget LM Ericsson by linking your view of its future revenue, earnings and margins to a forecast and then to an assumed fair value.

On Simply Wall St, Narratives live in the Community page and are designed to be easy to use, so you can see how a bullish view that supports a fair value of about SEK 109 compares with a cautious view closer to SEK 62, and how both stack up against a more central view near SEK 87.97.

Each Narrative connects a company story to numbers such as expected earnings in 2028 and a chosen future P/E, then compares the resulting Fair Value to the current share price. This can help you think through whether the gap between price targets like SEK 99.0 and SEK 56.0 lines up with your own expectations.

Because Narratives update when new news, earnings or analyst assumptions are added, you are not locked into a single view and can quickly see how fresh information might change the fair value you assign to Telefonaktiebolaget LM Ericsson.

For Telefonaktiebolaget LM Ericsson, however, we will make it really easy for you with previews of two leading Telefonaktiebolaget LM Ericsson Narratives:

🐂 Telefonaktiebolaget LM Ericsson Bull Case

Fair value: SEK 109.00

Premium to current price: about 9.7% above the last close of SEK 98.42

Revenue growth assumption: 2.56% a year

Assumes Ericsson benefits from AI driven automation, higher margin software and services, and a larger role in secure, mission critical networks across multiple sectors.

Builds in higher earnings by 2028, with profit margins and a future P/E that reflect analysts at the more optimistic end of the range.

Flags meaningful risks around geopolitics, cloud competition, revenue concentration, legal issues and hardware commoditization, so the outcome depends on how these factors play out.

🐻 Telefonaktiebolaget LM Ericsson Bear Case

Fair value: SEK 87.97

Discount to current price: about 11.9% below the last close of SEK 98.42

Revenue growth assumption: 1.11% annual decline

Assumes revenue pressure over the next few years, with only modest margin improvement and lower earnings expectations than the bullish view.

Uses a fair value close to the analyst consensus target, with a higher future P/E applied to more cautious revenue and profit assumptions.

Highlights headwinds such as tougher competition, softer demand in some markets, legal and regulatory costs, and execution risk in software and services.

Taken together, these two Narratives give you a clear range of outcomes for Ericsson based on different views about growth, profitability and risk. If you want to see how other investors are framing the story or build your own view around your assumptions, Curious how numbers become stories that shape markets? Explore Community Narratives can be a useful next step.

Do you think there’s more to the story for Telefonaktiebolaget LM Ericsson? Head over to our Community to see what others are saying!

OM:ERIC B 1-Year Stock Price Chart

_ This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned._

Companies discussed in this article include ERIC-B.ST.

Have feedback on this article? Concerned about the content? Get in touch with us directly._ Alternatively, email editorial-team@simplywallst.com_

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