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Here's Why Nokia (NOK) Appears to be a Smart Investment Pick
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Nokia Corporation’s (NOK - Free Report) shares have risen 32% over the past year, driven by a flexible business model and a quick time-to-market schedule to meet clients’ evolving needs. Earnings estimates for the current fiscal have increased 40% over the past year, while that for the next fiscal jumped 18.9%, implying solid inherent growth potential. With healthy fundamentals, this Zacks Rank #2 (Buy) communications solutions provider appears to be a solid investment option at the moment. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Image Source: Zacks Investment Research
Growth Drivers
Nokia is driving the transition of global enterprises into smart virtual networks by creating a single network for all services, converging mobile and fixed broadband, IP routing and optical networks with the software and services to manage them. Leveraging state-of-the-art technology, it is transforming the way people and things communicate and connect with each other. These include seamless transition to 5G technology, ultra-broadband access, IP and Software Defined Networking, cloud applications and IoT.
The company facilitates its customers to move away from an economy-of-scale network operating model to demand-driven operations by offering easy programmability and flexible automation to support dynamic operations, reduce complexity and improve efficiency. Nokia remains focused on building a robust, scalable software business and expanding it to structurally attractive enterprise adjacencies. It has inked more than 214 commercial 5G contracts across the globe. The company’s end-to-end portfolio includes products and services for every part of a network, which are helping operators to enable key 5G capabilities, such as network slicing, distributed cloud and industrial IoT. Accelerated strategy execution, sharpened customer focus and reduced long-term costs are expected to position the company as a global leader in the delivery of end-to-end 5G solutions.
Nokia has made significant progress on its three-phased journey of value creation. The company’s strategy includes Reset, Accelerate and Scale. Its focus on capital allocation and technology leadership is expected to help it grow profitably. The company is well-positioned for the ongoing technology cycle, given the strength of its end-to-end portfolio. Its installed base of high-capacity AirScale product is also growing fast.
In addition, Nokia is offering dynamic spectrum sharing (DSS) technology to network operators that synchronizes the spectrum usage between 4G and 5G, and helps them reuse lower-frequency 4G radio networks for 5G deployment. The DSS strategy enables the rollout of both 4G and 5G in the same band and proactively allocates spectrum resources between them based on user demand. By unlocking network efficiencies with common operability, software delivery and increased hardware sharing, Nokia has reduced the total cost of ownership for mobile operators.
The stock delivered an earnings surprise of 205.2%, on average, in the trailing four quarters and has a long-term earnings growth expectation of 10.4%.
Other Key Picks
Sierra Wireless, Inc. , carrying a Zacks Rank #2, is a solid pick within the industry. It has a long-term earnings growth expectation of 12.5% and delivered an earnings surprise of 58%, on average, in the trailing four quarters.
Over the past year, Sierra Wireless has gained 11.7%. Earnings estimates for the current year for the stock have moved up 68.8% since April 2021. The company continues to launch innovative products for business-critical operations that require high security and optimum 5G performance.
Knowles Corporation (KN - Free Report) , sporting a Zacks Rank #1, is a key pick for investors in the broader industry classification. It has a long-term earnings growth expectation of 10% and delivered a modest earnings surprise of 14.9%, on average, in the trailing four quarters. Earnings estimates for the current year have moved up 16.8% since April 2021.
The transformation from an acoustic component supplier to an audio solutions provider has enabled Knowles to migrate to higher-value solutions and increase content per device. This, in turn, has empowered the company to capitalize on the positive macro trends in audio and edge processing solutions.
KVH Industries, Inc. (KVHI - Free Report) is a Zacks Rank #2 stock. It delivered an earnings surprise of 20%, on average, in the trailing four quarters.
Despite global supply chain disruptions, KVH Industries is driving growth and margin expansion through new product introduction and subscriber migration to High-Throughput Satellites. The company aims to make decisive inroads into the still-nascent autonomous transportation markets with a strong balance sheet and zero debt. If KVH Industries manages to effectively mitigate supply chain woes, there could be room for cash flow expansion.
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Here's Why Nokia (NOK) Appears to be a Smart Investment Pick
Nokia Corporation’s (NOK - Free Report) shares have risen 32% over the past year, driven by a flexible business model and a quick time-to-market schedule to meet clients’ evolving needs. Earnings estimates for the current fiscal have increased 40% over the past year, while that for the next fiscal jumped 18.9%, implying solid inherent growth potential. With healthy fundamentals, this Zacks Rank #2 (Buy) communications solutions provider appears to be a solid investment option at the moment. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Image Source: Zacks Investment Research
Growth Drivers
Nokia is driving the transition of global enterprises into smart virtual networks by creating a single network for all services, converging mobile and fixed broadband, IP routing and optical networks with the software and services to manage them. Leveraging state-of-the-art technology, it is transforming the way people and things communicate and connect with each other. These include seamless transition to 5G technology, ultra-broadband access, IP and Software Defined Networking, cloud applications and IoT.
The company facilitates its customers to move away from an economy-of-scale network operating model to demand-driven operations by offering easy programmability and flexible automation to support dynamic operations, reduce complexity and improve efficiency. Nokia remains focused on building a robust, scalable software business and expanding it to structurally attractive enterprise adjacencies. It has inked more than 214 commercial 5G contracts across the globe. The company’s end-to-end portfolio includes products and services for every part of a network, which are helping operators to enable key 5G capabilities, such as network slicing, distributed cloud and industrial IoT. Accelerated strategy execution, sharpened customer focus and reduced long-term costs are expected to position the company as a global leader in the delivery of end-to-end 5G solutions.
Nokia has made significant progress on its three-phased journey of value creation. The company’s strategy includes Reset, Accelerate and Scale. Its focus on capital allocation and technology leadership is expected to help it grow profitably. The company is well-positioned for the ongoing technology cycle, given the strength of its end-to-end portfolio. Its installed base of high-capacity AirScale product is also growing fast.
In addition, Nokia is offering dynamic spectrum sharing (DSS) technology to network operators that synchronizes the spectrum usage between 4G and 5G, and helps them reuse lower-frequency 4G radio networks for 5G deployment. The DSS strategy enables the rollout of both 4G and 5G in the same band and proactively allocates spectrum resources between them based on user demand. By unlocking network efficiencies with common operability, software delivery and increased hardware sharing, Nokia has reduced the total cost of ownership for mobile operators.
The stock delivered an earnings surprise of 205.2%, on average, in the trailing four quarters and has a long-term earnings growth expectation of 10.4%.
Other Key Picks
Sierra Wireless, Inc. , carrying a Zacks Rank #2, is a solid pick within the industry. It has a long-term earnings growth expectation of 12.5% and delivered an earnings surprise of 58%, on average, in the trailing four quarters.
Over the past year, Sierra Wireless has gained 11.7%. Earnings estimates for the current year for the stock have moved up 68.8% since April 2021. The company continues to launch innovative products for business-critical operations that require high security and optimum 5G performance.
Knowles Corporation (KN - Free Report) , sporting a Zacks Rank #1, is a key pick for investors in the broader industry classification. It has a long-term earnings growth expectation of 10% and delivered a modest earnings surprise of 14.9%, on average, in the trailing four quarters. Earnings estimates for the current year have moved up 16.8% since April 2021.
The transformation from an acoustic component supplier to an audio solutions provider has enabled Knowles to migrate to higher-value solutions and increase content per device. This, in turn, has empowered the company to capitalize on the positive macro trends in audio and edge processing solutions.
KVH Industries, Inc. (KVHI - Free Report) is a Zacks Rank #2 stock. It delivered an earnings surprise of 20%, on average, in the trailing four quarters.
Despite global supply chain disruptions, KVH Industries is driving growth and margin expansion through new product introduction and subscriber migration to High-Throughput Satellites. The company aims to make decisive inroads into the still-nascent autonomous transportation markets with a strong balance sheet and zero debt. If KVH Industries manages to effectively mitigate supply chain woes, there could be room for cash flow expansion.