Ericsson (OM:ERIC) Q3 Earnings Confront A Sharp Revenue Reset

Ericsson closed today at SEK413.8 after a modestly positive week, yet the real story sits in the fresh Q3 2026 earnings print. Basic earnings per share came in at 3.89 SEK on revenue of SEK29,400m, a far smaller quarter than the blockbuster earlier this year that lifted trailing profit and pushed the net margin to 76% over the past twelve months. Traders are reacting to the latest snapshot. Longer term investors are weighing that rich margin profile and a P/E of 5.9x against forecasts that point to sharp earnings and revenue declines over the coming years.

Love Ericsson’s rich 76% trailing net margin but worried about forecast earnings and revenue pressure ahead? Line it up against peers in our 186 high quality undervalued stocks

Q3 2026 Earnings Summary

• Revenue (Q3 2026 vs Q3 2025): SEK29,400m vs. SEK75,024m (sharp decline in quarterly revenue)
• Net Income (Q3 2026 vs Q3 2025): SEK11,912m vs. SEK59,832m (material drop in quarterly profit)
• Basic EPS (Q3 2026 vs Q3 2025): SEK3.89 vs. SEK19.53 (earnings per share down strongly year on year)
• Trailing Net Profit Margin (last 12 months vs. prior 12 months): 76% vs. 52.8% (profitability much higher on a trailing basis despite the softer quarter)

Ask Charlie what makes Investor’s earnings jump look fragile.

Ericsson’s Profit Story Faces A Reality Check

For bullish investors, Ericsson’s 76% trailing net margin still carries weight. It tells you the last year included extremely profitable periods. The concern is that this cushion now meets a much leaner Q3. Revenue of SEK29,400m and basic EPS of SEK3.89 arrived after a far larger prior-year quarter, so the earnings engine looks less powerful in the latest snapshot. A modestly positive 7 day and 90 day share price run suggests confidence has not collapsed. However, the upbeat narrative now leans heavily on trailing rather than current strength.

Bearish Concerns Find Fresh Support In Q3

For the cautious view, Q3 numbers give plenty to work with. Ericsson’s revenue fell sharply versus the SEK75,024m booked a year earlier and net income dropped from SEK59,832m to SEK11,912m. That pulls near term profitability well below the trailing margin story and lines up with worries about future earnings pressure. The strong trailing net margin now looks flattered by a prior blockbuster period rather than a stable run rate. Recent share price gains over 30 and 90 days indicate no immediate stress, but the earnings trend gives bears clear ammunition.

After such a steep swing from a blockbuster period to a much thinner quarter, it is fair to ask whether Ericsson’s earnings reset is a one off or a sign of deeper strain in the business model. Scan the independent risk analysis for Investor which shows 1 important warning sign

Hunt For The Next Reset

Ericsson’s latest reset shows Investor how quickly sentiment can swing. The real opportunity is spotting stocks that could be undervalued before expectations shift.

• Company 1 - 23% below our estimate - supplies grid diagnostics and test equipment utilities need as electrification and data usage pressure aging infrastructure.
• Company 2 - 32% below our estimate - equips defense and security clients as expanded budgets and cyber threats drive upgrades to mission systems and secure communications.
• Company 3 - 35% below our estimate - expands digital banking tools to serve newly banked households as urbanization and a growing middle class seek formal credit.

Three companies from the same screener. Open the full list of 186 companies trading below our fair value estimates →

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.

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