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In January 2024, InvestingPro’s Fair Value model identified Telefonaktiebolaget LM Ericsson (NASDAQ:ERIC) as significantly undervalued, presenting a compelling investment opportunity that would go on to deliver remarkable returns. Fair Value analysis helps investors find optimal entry points, understand a stock’s intrinsic worth, and make more informed decisions by combining multiple valuation methodologies. This case study demonstrates how such analysis can identify mispriced securities before the broader market recognizes their potential. Investors looking for similar opportunities can explore today’s Most undervalued list for stocks currently showing value potential.
Ericsson, a global leader in telecommunications equipment and services, was facing challenges when InvestingPro’s models flagged it as undervalued in January 2024. At that time, the company reported revenue of $26.1 billion but was struggling with negative earnings per share of -$0.79. The stock had experienced significant volatility in the preceding months, with a 28.8% gain in December 2023 followed by a 12.5% drop in January 2024. Despite these challenges, InvestingPro’s analysis indicated the stock was trading 47.9% below its fair value.
When the Fair Value signal was issued, Ericsson was trading at $5.89. Fast forward to November 2025, and the stock is trading at $9.72, representing a 63% total return over 21 months. The price target of $9.58 was exceeded, validating InvestingPro’s analysis. What’s particularly impressive is how accurately the model identified both the undervaluation and the potential upside, with the estimated upside of 47.9% closely tracking the stock’s performance trajectory.
Recent developments have supported the bullish thesis. Ericsson’s financial health has improved significantly, with EPS turning positive at $0.79. The company has secured strategic partnerships, including a five-year programmable networks deal with Vodafone and a $3 billion partnership with EDC to boost Canadian tech. Ericsson’s Q3 2025 results surpassed EPS expectations, with margin improvements offsetting sales challenges. The company also completed the sale of its iconectiv business to Koch Equity Development, further strengthening its balance sheet.
InvestingPro’s Fair Value methodology combines multiple approaches to determine a stock’s intrinsic value. The system aggregates discounted cash flow models, comparable company analyses, dividend discount models, and analyst consensus targets to arrive at a comprehensive valuation. This multi-faceted approach helps identify opportunities that single-metric analyses might miss, providing investors with a more robust framework for decision-making.
The Ericsson success story demonstrates the power of data-driven investment analysis. InvestingPro subscribers who acted on this signal had the opportunity to capture significant returns while the broader market gradually recognized Ericsson’s true value. The platform continues to identify similar opportunities across global markets, combining fundamental analysis with proprietary algorithms to uncover mispriced securities.
Learn more about InvestingPro to access Fair Value analyses, financial health scores, and other tools that can help you identify tomorrow’s winners today. With over 135,000 stocks covered globally and exclusive metrics not available elsewhere, InvestingPro provides the edge needed in today’s complex markets.