Ericsson (NASDAQ:ERIC) Shares Gap Up Following Earnings Beat

Key Points

• Ericsson beat quarterly expectations: Adjusted EPS came in at $0.18 versus the $0.14 consensus, while revenue reached $5.94 billion, above estimates of $5.59 billion and up 5.8% year over year.
• Shares jumped after the report: Ericsson opened at $10.65 after previously closing at $9.58, with trading volume exceeding 11.9 million shares.
• Risks remain despite the positive reaction: Higher component costs could pressure profitability next year, while analysts maintain a consensus “Hold” rating and a $9.60 target price.

Shares of Ericsson (NASDAQ:ERIC - Get Free Report) gapped up prior to trading on Thursday following a stronger than expected earnings report. The stock had previously closed at $9.58, but opened at $10.65. Ericsson shares last traded at $10.3950, with a volume of 11,903,527 shares.

The communications equipment provider reported $0.18 earnings per share for the quarter, beating analysts' consensus estimates of $0.14 by $0.04. The company had revenue of $5.94 billion for the quarter, compared to analyst estimates of $5.59 billion. Ericsson had a return on equity of 20.63% and a net margin of 10.72%. The firm's revenue for the quarter was up 5.8% on a year-over-year basis. During the same quarter last year, the firm posted $1.37 EPS.

Ericsson Announces Dividend

The firm also recently announced a dividend, which was paid on Tuesday, September 29th. Stockholders of record on Tuesday, September 29th were given a $0.1579 dividend. The ex-dividend date was Tuesday, September 29th. Ericsson's dividend payout ratio is 25.64%.

Key Ericsson News

Here are the key news stories impacting Ericsson this week:

• Positive Sentiment: Q3 results exceeded expectations: Ericsson reported adjusted EPS of $0.18 versus the $0.14 consensus, while revenue rose to $5.94 billion from an expected $5.59 billion. Growth was driven primarily by higher sales in the Networks business. Ericsson reports third quarter results 2026
• Positive Sentiment: Profit decline was less concerning than the headline suggests: Quarterly profit fell largely because the prior-year period included a sizable divestment gain, while core profit declined less than analysts had anticipated. The earnings beat helped support the stock. Ericsson's third-quarter core profit falls less than expected
• Positive Sentiment: Restructuring is intended to improve execution and margins: Ericsson will combine its North East Asia and South East Asia, Oceania and India operations into a new Asia-Pacific market area, while reallocating its Enterprise Wireless Solutions portfolio to capture synergies and better use R&D resources. Ericsson announces simplification of Group structure and changes to the Executive Team
• Positive Sentiment: 6G progress adds a longer-term catalyst: Ericsson and Verizon completed what they described as the first pre-standard outdoor 6G field call in the 7 GHz band, moving testing from the laboratory to a commercial network site. Verizon and Ericsson accelerate 6G development
• Negative Sentiment: Higher component costs remain a risk: Management warned that rising component costs will pressure profitability next year, limiting the sustainability of the positive earnings reaction. Ericsson to streamline structure as component costs pressure profitability

Wall Street Analyst Weigh In

ERIC has been the subject of several research reports. Citigroup reaffirmed a "neutral" rating on shares of Ericsson in a research note on Wednesday, July 15th. Weiss Ratings downgraded shares of Ericsson from a "buy (b)" rating to a "buy (b-)" rating in a report on Friday, August 28th. Danske raised shares of Ericsson from a "hold" rating to a "buy" rating in a research note on Wednesday, July 15th. Morgan Stanley cut Ericsson from an "equal weight" rating to an "underweight" rating and lowered their target price for the stock from $11.00 to $9.00 in a report on Tuesday, September 22nd. Finally, JPMorgan Chase & Co. lowered their target price on Ericsson from $11.40 to $10.20 and set a "neutral" rating on the stock in a report on Thursday, October 8th. Two equities research analysts have rated the stock with a Buy rating, three have assigned a Hold rating and one has issued a Sell rating to the stock. According to MarketBeat, the stock has an average rating of "Hold" and a consensus target price of $9.60.

Institutional Investors Weigh In On Ericsson

Several hedge funds and other institutional investors have recently bought and sold shares of ERIC. Advisors Preferred LLC purchased a new stake in shares of Ericsson in the 1st quarter valued at approximately $493,000. Bank of New York Mellon Corp increased its holdings in shares of Ericsson by 8.5% during the 1st quarter. Bank of New York Mellon Corp now owns 160,581 shares of the communications equipment provider's stock worth $1,810,000 after buying an additional 12,534 shares during the last quarter. Finally, Public Employees Retirement System of Ohio acquired a new stake in shares of Ericsson during the 2nd quarter worth approximately $15,812,000. 7.99% of the stock is currently owned by institutional investors and hedge funds.

Ericsson Trading Up 8.9%

The stock has a market cap of $35.18 billion, a PE ratio of 13.38, a price-to-earnings-growth ratio of 1.80 and a beta of 0.96. The company has a debt-to-equity ratio of 0.21, a quick ratio of 0.89 and a current ratio of 1.12. The company's 50-day moving average price is $9.90 and its 200 day moving average price is $10.95.

Ericsson Company Profile

Telefonaktiebolaget LM Ericsson, commonly known as Ericsson, is a Swedish telecommunications and technology company that provides communications infrastructure, software, and related services to telecommunications operators and enterprises worldwide. The company was founded in 1876 by Lars Magnus Ericsson and is headquartered in Stockholm, Sweden.

Ericsson's offerings include mobile network equipment and services for 4G and 5G networks, radio access systems, core networks, transport solutions, and network management software.

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