Ericsson (ERIC) Delivers Q3 Sales Beat as New CEO Steps In
Key Takeaways
- Net sales rose to SEK 59.5 billion, up 6% reported and 7% on an organic basis year over year, beating market expectations.
- Adjusted EBITA (earnings before interest, taxes, and amortization) came in at SEK 10.1 billion, with a 17% margin, ahead of forecasts after adjusting for a prior-year divestment gain.
- Net income fell to SEK 5.8 billion from SEK 11.3 billion a year earlier, largely because the prior-year quarter included a one-time capital gain from the iconectiv sale.
- Diluted earnings per share (EPS) were SEK 1.77, down from SEK 3.33 a year ago.
- New CEO Per Narvinger, in his first earnings report, flagged rising component costs tied to the AI boom as a key margin headwind for 2027.
- Shares climbed more than 10% intraday following the release, reflecting relief over the sales beat and a resilient margin performance.
Why This Report Matters
Ericsson’s third-quarter results carry extra significance as the first under new CEO Per Narvinger, who assumed the role this month during an extended period of soft demand for 5G network equipment. The Swedish telecom equipment provider has been trimming costs and headcount for years to counter weak spending by mobile operators. Investors are paying close attention to whether the company can maintain profitability while demand for its core radio access network technology stays largely unchanged. At the same time, the wider sector faces rising input costs from the artificial intelligence surge, which is pushing up prices for semiconductors and memory. This quarter provided an initial look at how effectively Ericsson’s commercial and cost measures can handle those pressures.
The Quarter in Numbers
Ericsson reported third-quarter net sales of SEK 59.5 billion, up 6% on a reported basis and 7% organically, with growth across all segments and market areas except the Americas, which declined 1%. Adjusted EBITA reached SEK 10.1 billion, for a margin of 17%, while the adjusted gross margin was 47.7% versus 48.1% a year earlier. To get a broader view of how the stock stacks up against peers, I also checked this using Tickeron’s AI Screener.
Net income declined to SEK 5.8 billion, down roughly 49% year over year, because the prior-year period included a SEK 7.6 billion capital gain on the iconectiv divestment. Diluted EPS fell to SEK 1.77 from SEK 3.33. Excluding that gain, EBITA actually increased year over year, a result that exceeded analyst forecasts.
The Networks segment performed well, with sales rising 9% to SEK 38.7 billion and an adjusted gross margin steady at 50.3%. Growth came from strong momentum in markets such as Japan and some customers accelerating purchases ahead of expected price increases. Free cash flow before M&A totaled SEK 4.9 billion, and net cash increased to SEK 60.7 billion.
Market Reaction
The market reacted positively to the results, with ERIC shares listed in Stockholm rising more than 10% intraday and closing around 8% higher near SEK 104.85. The move reflected relief that the company exceeded expectations on sales and adjusted EBITA even though reported profit fell sharply due to the prior-year divestment gain. Analysts, including Bernstein, pointed to solid performance in Japan and India along with a reassuring fourth-quarter outlook. That said, sentiment stays measured because of ongoing weakness in the Americas and management’s caution that higher component costs will weigh on gross margin next year. Overall, the positive tone indicates investors are focusing on execution strength rather than near-term cost challenges.
Outlook and What to Monitor
Ericsson guided that sales in Networks and Cloud Software and Services should follow the three-year average seasonal pattern in the fourth quarter, with Networks’ adjusted gross margin expected between 49% and 51%. This points to a seasonally strong finish to the year and gives investors some near-term visibility.
The bigger question involves 2027. Management noted clearly that the company will not escape higher component costs driven by the AI boom, calling next year a potential transition period. Because many contracts with customers and suppliers run multiple years, efforts to offset costs through portfolio optimization, price increases, supply chain adjustments, and efficiency gains will take time to appear in results. In the shorter term, Ericsson is using tactical steps such as product substitution and upselling to help protect margins.
Investors should keep an eye on the RAN market, which management expects to remain broadly flat, and track progress in passing higher costs to customers as contracts renew. The Americas region, which continues to decline, remains an important variable. Organizational changes announced with the results, including combining Asia segments and reshaping enterprise wireless solutions, reflect the new CEO’s emphasis on simplification and cost control, themes that are likely to continue.
AI Tools in Everyday Research
When reviewing earnings like these, I find Tickeron’s AI Screener useful for quickly filtering stocks by industry, technical patterns, and performance metrics. It helps surface relevant comparisons without spending hours on manual work, which is especially handy during earnings season when multiple companies report around the same time.
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Contributor
Sergey Savastiouk, Ph.D. has a degree in Applied Mathematics from Moscow University and has extensive experience as an entrepreneur, investor, manager, and mathematician. His professional expertise is in applied mathematics, mathematical modeling, system and pattern analysis, and software and hardware system integration. He has served as the CEO of several hi-tech start-up companies and nonprofit organizations, which has given him proven capabilities in business strategy for high-tech start-up companies, market assessment, company formation, team building, product development, marketing, and sales. He has published numerous articles in journals and magazines on related fields. As a retail investor, he spent 15 years developing his proprietary trading and quantitative algorithms (now Tickeron’s A.I.), which brought him significant returns in trading the stock market. His current work and goal in founding Tickeron is to bring professional, sophisticated stock market analysis capabilities to retail investors via an easy-to-use interface.
ERIC's MACD Histogram just turned positive
The Moving Average Convergence Divergence (MACD) for ERIC turned positive on October 08, 2026. Looking at past instances where ERIC's MACD turned positive, the stock continued to rise in 33 of 46 cases over the following month. The odds of a continued upward trend are 72%.
Technical Analysis (Indicators)
Bullish Trend Analysis
The Momentum Indicator moved above the 0 level on October 08, 2026. You may want to consider a long position or call options on ERIC as a result. In 56 of 85 past instances where the momentum indicator moved above 0, the stock continued to climb. The odds of a continued upward trend are 66%.
ERIC moved above its 50-day moving average on October 15, 2026 date and that indicates a change from a downward trend to an upward trend.
Following a +1.00% 3-day Advance, the price is estimated to grow further. Considering data from situations where ERIC advanced for three days, in 197 of 294 cases, the price rose further within the following month. The odds of a continued upward trend are 67%.
Bearish Trend Analysis
The RSI Oscillator demonstrated that the stock has entered the overbought zone. This may point to a price pull-back soon.
The Stochastic Oscillator demonstrated that the ticker has stayed in the overbought zone for 5 days. The longer the ticker stays in the overbought zone, the sooner a price pull-back is expected.
The 10-day moving average for ERIC crossed bearishly below the 50-day moving average on September 25, 2026. This indicates that the trend has shifted lower and could be considered a sell signal. In 6 of 15 past instances when the 10-day crossed below the 50-day, the stock continued to move higher over the following month. The odds of a continued downward trend are 40%.
Following a 3-day decline, the stock is projected to fall further. Considering past instances where ERIC declined for three days, the price rose further in 50 of 62 cases within the following month. The odds of a continued downward trend are 60%.
ERIC broke above its upper Bollinger Band on October 15, 2026. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.
Fundamental Analysis (Ratings)
The Tickeron Valuation Rating of 35 (best 1 - 100 worst) indicates that the company is fair valued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (2.935) is normal, around the industry mean (5.894). P/E Ratio (12.683) is within average values for comparable stocks, (107.419). ERIC's Projected Growth (PEG Ratio) (1.646) is slightly higher than the industry average of (0.778). ERIC has a moderately high Dividend Yield (0.033) as compared to the industry average of (0.006). P/S Ratio (1.436) is also within normal values, averaging (11.937).
The Tickeron SMR rating for this company is 37 (best 1 - 100 worst), indicating strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron PE Growth Rating for this company is 56 (best 1 - 100 worst), pointing to consistent earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron Price Growth Rating for this company is 68 (best 1 - 100 worst), indicating slightly worse than average price growth. ERIC’s price grows at a lower rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron Profit vs. Risk Rating rating for this company is 84 (best 1 - 100 worst), indicating that the returns do not compensate for the risks. ERIC’s unstable profits reported over time resulted in significant Drawdowns within these last five years. A stable profit reduces stock drawdown and volatility. The average Profit vs. Risk Rating rating for the industry is 77, placing this stock worse than average.
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General Information
a provider of telecommunications equipment and related services to mobile and fixed network operators
Industry TelecommunicationsEquipment
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