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Will Nokia (NOK) Disappoint Q2 Earnings on Lower Revenues?
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Nokia Corporation (NOK - Free Report) is scheduled to report second-quarter 2018 results before the opening bell on Jul 26. In the last reported quarter, the company delivered a negative earnings surprise of 33.3%. Nokia surpassed the Zacks Consensus Estimate for earnings thrice in the trailing four quarters, with an average beat of 52.8%.
Factors at Play
During the second quarter, Nokia inked a deal to acquire SpaceTime Insight, a California-based IoT (Internet of Things) startup, for an undisclosed amount. The deal is aimed at expanding Nokia’s IoT portfolio and analytics capabilities while expediting the development of new IoT applications for key vertical markets. The buyout supports Nokia's software strategy and leverages SpaceTime’s sales expertise and proven track record in IoT application development, machine learning and data science to augment the efficacy of the Nokia Software IoT product unit.
During the quarter, the company announced the launch of a new 5G design concept and deployment services, which will help operators reduce time-to-market cost effectively. The company also completed an end-to-end 5G New Radio data call in China. The 3GPP-compliant dual connectivity trial was conducted by the 5G Technology R&D team of the Chinese Ministry of Industry and Information Technology.
Nokia, in collaboration with Orange, completed a live network trial in Poland, in an effort to demonstrate how the use of cloud optimized Radio Access Network (RAN) will benefit the progression to 5G. This cloud RAN trial was the first of its kind in operational LTE network in Europe to be conducted using the operator’s own cloud infrastructure. The trial marked an important milestone in Orange’s upcoming distributed cloud architecture for 5G. The AirScale Cloud RAN of Nokia provides the flexibility as and when different requirements for 5G, IoT, low-latency services and end-to-end slicing crop up.
Nokia entered into an agreement with IT firm HCL Technologies to streamline and modernize its outsourced IT management services. The five-year deal entails HCL to integrate the services of four current vendors into a single IT services delivery and design framework with the help of a transformation roadmap.
All these collaborations and product launches are likely to result in incremental revenues in the near future. However, for the second quarter, the Zacks Consensus Estimate for total revenues stands at $6,084 million, down from $6,180 million reported in the year-earlier quarter as the industry faces soft demands on challenging macroeconomic environment. Adjusted earnings per share are pegged at 4 cents, down from 9 cents reported a year ago.
Earnings Whispers
Our proven model does not conclusively show that Nokia is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as elaborated below.
Earnings ESP: Nokia has an Earnings ESP of -25.00%, as the Most Accurate Estimate is pegged at 3 cents and the Zacks Consensus Estimate is 4 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Nokia currently has a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s negative ESP acts as a spoiler.
We caution against all Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Advanced Micro Devices, Inc. (AMD - Free Report) has an Earnings ESP of +2.45% and a Zacks Rank #2.
KEMET Corporation (KEM) has an Earnings ESP of +2.47% and a Zacks Rank #2.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Will Nokia (NOK) Disappoint Q2 Earnings on Lower Revenues?
Nokia Corporation (NOK - Free Report) is scheduled to report second-quarter 2018 results before the opening bell on Jul 26. In the last reported quarter, the company delivered a negative earnings surprise of 33.3%. Nokia surpassed the Zacks Consensus Estimate for earnings thrice in the trailing four quarters, with an average beat of 52.8%.
Factors at Play
During the second quarter, Nokia inked a deal to acquire SpaceTime Insight, a California-based IoT (Internet of Things) startup, for an undisclosed amount. The deal is aimed at expanding Nokia’s IoT portfolio and analytics capabilities while expediting the development of new IoT applications for key vertical markets. The buyout supports Nokia's software strategy and leverages SpaceTime’s sales expertise and proven track record in IoT application development, machine learning and data science to augment the efficacy of the Nokia Software IoT product unit.
During the quarter, the company announced the launch of a new 5G design concept and deployment services, which will help operators reduce time-to-market cost effectively. The company also completed an end-to-end 5G New Radio data call in China. The 3GPP-compliant dual connectivity trial was conducted by the 5G Technology R&D team of the Chinese Ministry of Industry and Information Technology.
Nokia, in collaboration with Orange, completed a live network trial in Poland, in an effort to demonstrate how the use of cloud optimized Radio Access Network (RAN) will benefit the progression to 5G. This cloud RAN trial was the first of its kind in operational LTE network in Europe to be conducted using the operator’s own cloud infrastructure. The trial marked an important milestone in Orange’s upcoming distributed cloud architecture for 5G. The AirScale Cloud RAN of Nokia provides the flexibility as and when different requirements for 5G, IoT, low-latency services and end-to-end slicing crop up.
Nokia entered into an agreement with IT firm HCL Technologies to streamline and modernize its outsourced IT management services. The five-year deal entails HCL to integrate the services of four current vendors into a single IT services delivery and design framework with the help of a transformation roadmap.
All these collaborations and product launches are likely to result in incremental revenues in the near future. However, for the second quarter, the Zacks Consensus Estimate for total revenues stands at $6,084 million, down from $6,180 million reported in the year-earlier quarter as the industry faces soft demands on challenging macroeconomic environment. Adjusted earnings per share are pegged at 4 cents, down from 9 cents reported a year ago.
Earnings Whispers
Our proven model does not conclusively show that Nokia is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as elaborated below.
Earnings ESP: Nokia has an Earnings ESP of -25.00%, as the Most Accurate Estimate is pegged at 3 cents and the Zacks Consensus Estimate is 4 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Nokia Corporation Price and EPS Surprise
Nokia Corporation Price and EPS Surprise | Nokia Corporation Quote
Zacks Rank: Nokia currently has a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s negative ESP acts as a spoiler.
We caution against all Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Corning Incorporated (GLW - Free Report) has an Earnings ESP of +1.37% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Advanced Micro Devices, Inc. (AMD - Free Report) has an Earnings ESP of +2.45% and a Zacks Rank #2.
KEMET Corporation (KEM) has an Earnings ESP of +2.47% and a Zacks Rank #2.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>