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Why Is Nokia (NOK) Up 9.5% Since the Last Earnings Report?
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It has been about a month since the last earnings report for Nokia Corporation (NOK - Free Report) . Shares have added about 9.5% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Fourth Quarter Results
Nokia Corporation’s fourth-quarter 2016 earnings per share of €0.12 (approximately $0.13) beat the Zacks Consensus Estimate of $0.08. In the year-ago period, Nokia had reported earnings of €0.15 ($0.17) per share.
Net sales improved year over year (on a comparable combined company basis) to €6.7 billion (approximately $7.1 billion). The top line missed the Zacks Consensus Estimate of $7.38 billion. A disappointing performance by the Nokia Networks division, due to the challenging market conditions, hurt the top line. Moreover, weak sales in Mobile Networks, which is part of Ultra Broadband Networks, contributed to the significant decline .
Quarterly adjusted gross margin was 42% in the reported quarter compared with 42.4% a year ago. Operating margin decreased 260 basis points (bps) to 14% on a year-over-year basis. In the fourth quarter, Nokia generated net cash from operating activities of €510 million as against €460 million at the end of 2015.
Segmental Revenue
In the Nokia Networks segment, total revenue was approximately €6,069 million (around $6,372 million), down 14% year over year (on a comparable combined company basis). The segment includes Ultra Broadband Networks and IP Networks and Applications. The 15% decline in the Ultra Broadband Networks sub-group to €4,332 million hurt segmental sales. The segment’s sales also suffered due to a 12% reduction in net sales of IP Networks and Application to €1,976 million.
Notably, net sales declined in all regions, apart from Middle East & Africa, which led to the segment’s below-par performance. Net sales declined by 11% in North America, by 30% in Latin America, by 2% in the Asia Pacific, by 33% in Greater China and by 17% in Europe. Segmental gross margin improved 50 bps to 40.6% in the reported quarter. Quarterly adjusted operating margin was 14.1% compared with 15.5% a year ago.
In the Nokia Technologies segment, quarterly total revenue was €309 million (approximately $324 million), down 25% year over year. Segmental gross margin was 92.9% compared with 99% in the fourth quarter of 2015. Operating margin contracted significantly to 51.1%.
In Group Common and Other, net sales surged 34% to €341 million (approximately $358 million). Segmental gross margin was 18.8%, up 620 basis points. The segment incurred an operating loss in the quarter under review.
Outlook
The company, that officially took control of rival Alcatel-Lucent in Jan 2016, continues to expect annual cost savings of €1.2 billion in full-year 2018, excluding Nokia Technologies. For 2017, capital expenditure outlook for the company is approximately €500 million.
The company expects net sales in its primary networks division to decline in 2017 “in line with the primary addressable market”. Segmental operating margin is forecast in the band of 8–10% for 2017. Non-IFRS tax rate for 2017 is expected in the mid-point of the 30% to 35%.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.
Currently, Nokia's stock has a subpar Growth Score of 'D', though it is lagging a bit on the momentum front with an 'F'. However, the stock was allocated a grade of 'B' on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for value based on our styles scores.
Outlook
The stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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Why Is Nokia (NOK) Up 9.5% Since the Last Earnings Report?
It has been about a month since the last earnings report for Nokia Corporation (NOK - Free Report) . Shares have added about 9.5% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Fourth Quarter Results
Nokia Corporation’s fourth-quarter 2016 earnings per share of €0.12 (approximately $0.13) beat the Zacks Consensus Estimate of $0.08. In the year-ago period, Nokia had reported earnings of €0.15 ($0.17) per share.
Net sales improved year over year (on a comparable combined company basis) to €6.7 billion (approximately $7.1 billion). The top line missed the Zacks Consensus Estimate of $7.38 billion. A disappointing performance by the Nokia Networks division, due to the challenging market conditions, hurt the top line. Moreover, weak sales in Mobile Networks, which is part of Ultra Broadband Networks, contributed to the significant decline .
Quarterly adjusted gross margin was 42% in the reported quarter compared with 42.4% a year ago. Operating margin decreased 260 basis points (bps) to 14% on a year-over-year basis. In the fourth quarter, Nokia generated net cash from operating activities of €510 million as against €460 million at the end of 2015.
Segmental Revenue
In the Nokia Networks segment, total revenue was approximately €6,069 million (around $6,372 million), down 14% year over year (on a comparable combined company basis). The segment includes Ultra Broadband Networks and IP Networks and Applications. The 15% decline in the Ultra Broadband Networks sub-group to €4,332 million hurt segmental sales. The segment’s sales also suffered due to a 12% reduction in net sales of IP Networks and Application to €1,976 million.
Notably, net sales declined in all regions, apart from Middle East & Africa, which led to the segment’s below-par performance. Net sales declined by 11% in North America, by 30% in Latin America, by 2% in the Asia Pacific, by 33% in Greater China and by 17% in Europe. Segmental gross margin improved 50 bps to 40.6% in the reported quarter. Quarterly adjusted operating margin was 14.1% compared with 15.5% a year ago.
In the Nokia Technologies segment, quarterly total revenue was €309 million (approximately $324 million), down 25% year over year. Segmental gross margin was 92.9% compared with 99% in the fourth quarter of 2015. Operating margin contracted significantly to 51.1%.
In Group Common and Other, net sales surged 34% to €341 million (approximately $358 million). Segmental gross margin was 18.8%, up 620 basis points. The segment incurred an operating loss in the quarter under review.
Outlook
The company, that officially took control of rival Alcatel-Lucent in Jan 2016, continues to expect annual cost savings of €1.2 billion in full-year 2018, excluding Nokia Technologies. For 2017, capital expenditure outlook for the company is approximately €500 million.
The company expects net sales in its primary networks division to decline in 2017 “in line with the primary addressable market”. Segmental operating margin is forecast in the band of 8–10% for 2017. Non-IFRS tax rate for 2017 is expected in the mid-point of the 30% to 35%.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.
Nokia Corporation Price and Consensus
Nokia Corporation Price and Consensus | Nokia Corporation Quote
VGM Scores
Currently, Nokia's stock has a subpar Growth Score of 'D', though it is lagging a bit on the momentum front with an 'F'. However, the stock was allocated a grade of 'B' on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for value based on our styles scores.
Outlook
The stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.