Nokia Shares Drop 8% After Preliminary Q2 Earnings

Nokia Corporation (NYSE:NOK) is a prominent player in the B2B technology sector, known for its innovative solutions in mobile, fixed, and cloud networks. The company is also recognized for its pioneering research through Nokia Bell Labs. Recently, a manager's transaction involving Patrik Hammarén, a senior manager, was reported. Hammarén received 498 shares as a share-based incentive on October 31, 2024, under the EU Market Abuse Regulation.

Despite Nokia's strong position in the technology sector, Barclays has maintained an "Underweight" rating for the company, with a "hold" action. As of October 30, 2024, Nokia's stock price was $4.78. Barclays also adjusted Nokia's price target to EUR 3.50 from EUR 3, reflecting a cautious outlook on the company's stock performance.

Nokia's financial metrics provide insight into its market valuation. The company has a high price-to-earnings (P/E) ratio of 63.14, indicating that investors are paying a premium for each dollar of earnings. This suggests that the market has high expectations for Nokia's future growth. The price-to-sales ratio of 1.19 shows that the market values Nokia at 1.19 times its annual sales, which is relatively moderate.

The enterprise value to sales ratio of 1.08 and the enterprise value to operating cash flow ratio of 6.84 highlight Nokia's valuation in relation to its sales and cash flow. These figures suggest that the company's total value is closely aligned with its sales and cash flow from operations. Additionally, Nokia's earnings yield of 1.58% indicates modest earnings relative to its share price.

Nokia's financial stability is further supported by a low debt-to-equity ratio of 0.19, showing a conservative approach to leveraging debt. The current ratio of 1.73 suggests that Nokia has a strong liquidity position, capable of covering its short-term liabilities effectively. These financial metrics reflect Nokia's commitment to maintaining a secure and sustainable business model.

• Nokia Corporation (NYSE:NOK) accelerates its share buyback program, aiming to repurchase up to €600 million worth of shares to return value to shareholders.
• The company's stock received a positive outlook from Danske Bank, upgrading from Hold to Buy, reflecting confidence in Nokia's financial strategies and market position.
• Nokia declared a dividend of approximately $0.0346, with a record date and payment date on October 22, 2024, and November 5, 2024, respectively, as part of its commitment to returning value to its shareholders.

Nokia Corporation (NYSE:NOK) is a global leader in telecommunications, information technology, and consumer electronics. The company is known for its innovative solutions in mobile networks, digital health, and virtual reality. Nokia competes with other major players like Ericsson and Huawei in the telecommunications industry. On October 22, 2024, Nokia announced a share buyback program to repurchase its own shares, aiming to return up to €600 million to shareholders over two years.

The share buyback program, which began on March 20, 2024, was accelerated on July 19, 2024, to increase the number of shares repurchased within the year. This initiative is conducted in compliance with EU regulations and authorized by Nokia’s Annual General Meeting. On October 22, 2024, Nokia executed transactions amounting to €8.4 million, resulting in the company holding 180.2 million treasury shares. BofA Securities Europe SA manages the buyback program on behalf of Nokia.

In addition to the buyback program, Nokia's stock received a positive outlook from Danske Bank, which upgraded its stock grade from Hold to Buy on October 18, 2024. At the time of the upgrade, the stock price was $4.73. This upgrade reflects confidence in Nokia's financial strategies and market position. As of October 22, 2024, Nokia's stock price on the NYSE is $4.79, showing an increase of 2.35% or $0.11.

Nokia also declared a dividend of approximately $0.0346 on October 22, 2024, with a record date on the same day. Shareholders can expect the dividend payment on November 5, 2024. This dividend declaration, initially made on January 26, 2024, is part of Nokia's commitment to returning value to its shareholders. The company's market capitalization is approximately $26.12 billion, with a trading volume of 14.3 million shares.

Nokia (NYSE:NOK) shares rose more than 3% pre-market today despite the company's announcement of a Q1 profit that was smaller than expected, affected by subdued demand for 5G equipment in North America and India.

The Finnish telecommunications equipment maker recorded a first-quarter operating profit of 597 million euros, up from 479 million euros the previous year. However, this was below the 663 million euros analysts had projected.

Earnings per share for the first quarter were 0.09 euros, slightly above the consensus estimate of 0.08 euros. Revenue for the quarter was reported at 4.67 billion euros, falling short of expectations of 5.41 billion euros.

Despite the revenue shortfall, Nokia saw a significant improvement in its comparable gross margin, which increased to 48.6% from 37.7% in the same quarter last year.

The Mobile Networks segment, which includes 5G equipment, saw a 37% drop in sales when adjusted for currency effects. Nokia described this quarter as the lowest point of the year and expects sales to rebound for the remainder of 2024.

Nokia maintained its January guidance, predicting a comparable operating profit for 2024 to be between 2.3 billion and 2.9 billion euros.

Nokia (NYSE:NOK) announced preliminary results for the Q2 that were below expectations, leading to a more than 8% decline in its shares on Friday.

Nokia anticipates Q2 sales of 5.7 billion euros, falling short of the Street estimate of 6 billion euros. The company also expects a comparable operating profit margin of 11%.

Consequently, Nokia has revised its full-year sales forecast to a range of 23.2-24.6 billion euros, which is lower than the previously anticipated range of 24.6-26.2 billion euros. The outlook for the comparable operating margin range has also been narrowed to 11.5-13%, compared to the previous range of 11.5-14%.

In an update, Nokia explained that these adjustments primarily pertain to its Network Infrastructure and Mobile Networks business groups. The company attributed the weaker demand outlook for the latter half of the year to a combination of macroeconomic factors and customers' inventory management. Customer spending plans have been increasingly affected by high inflation and rising interest rates, leading to delays in certain projects, notably in North America, which is now expected to occur in 2024.