A strong stock as of late has been Ericsson (ERIC). Shares have been marching higher, with the stock up 19.5% over the past month. The stock hit a new 52-week high of $11.38 in the previous session. Ericsson has gained 16.4% since the start of the year compared to the 0.3% gain for the Zacks Computer and Technology sector and the 17.3% return for the Zacks Wireless Equipment industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on January 23, 2026, Ericsson reported EPS of $0.27 versus consensus estimate of $0.23 while it beat the consensus revenue estimate by 4.74%.
For the current fiscal year, Ericsson is expected to post earnings of $0.68 per share on $25.73 in revenues. This represents a 0% change in EPS on a 6.54% change in revenues. For the next fiscal year, the company is expected to earn $0.71 per share on $26.28 in revenues. This represents a year-over-year change of 4.36% and 2.12%, respectively.
Valuation Metrics
Though Ericsson has recently hit a 52-week high, what is next for Ericsson? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). The individual style scores for Value, Growth, Momentum and the combined VGM Score run from A through F. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Ericsson has a Value Score of A. The stock's Growth and Momentum Scores are A and B, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 16.6X current fiscal year EPS estimates, which is not in-line with the peer industry average of 32X. On a trailing cash flow basis, the stock currently trades at 11.7X versus its peer group's average of 17.6X. Additionally, the stock has a PEG ratio of 1.96. This is good enough to put the company in the top echelon of all stocks we cover from a value perspective, making Ericsson an interesting choice for value investors.
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Ericsson currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Ericsson fits the bill. Thus, it seems as though Ericsson shares could have a bit more room to run in the near term.
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Ericsson (ERIC): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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