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Will Top-Line Contraction Dent Nokia (NOK) Q4 Earnings?

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Nokia Corporation (NOK - Free Report) is scheduled to report fourth-quarter 2020 results, before the opening bell, on Feb 4. In the last reported quarter, adjusted earnings missed the Zacks Consensus Estimate by a penny. In the fourth quarter, the company is likely to have recorded lower revenues year over year despite healthy demand for 5G telecommunications equipment for higher 5G deployments across the globe due to COVID-19 adversities.

Factors at Play

During the quarter, Nokia reached the milestone of more than 100 5G contracts with communications service providers, marking an important achievement in the highly competitive market. The Finland-based telecom equipment provider has an aggregate of 160 5G engagements with operators, from deals to paid trials. It currently has 34 live 5G networks, both public and private. The company has launched 4G and 5G network slicing solutions to enable operators to deploy and manage network slices across multi-domain environments.

During the to-be-reported quarter, Nokia secured a prime contract from Telefónica, S.A.’s U.K. subsidiary to support the latter’s existing network connectivity as it transitions to cloud architecture. It inked a multi-year contract with Vivacom, a leading fiber access provider in Bulgaria, to expand the latter’s GPON network and introduce XGS-PON. In addition, the company collaborated with leading New Zealand mobile operator Spark to launch 5G services in the Auckland Viaduct region. It partnered with Nextlink Internet to bring broadband services to people living in underserved regions in the Central United States. The companies plan to upgrade networks with the Citizens Broadband Radio Service spectrum and Nokia’s Airscale 4G LTE RAN.

During the quarter, Nokia inked contracts with some leading telecom operators like Elisa Finland, A1 Austria, Deutsche Telekom AG, Swisscom AG, TELUS Corporation, A1 Telekom, Airtel Kenya and Proximus Luxembourg. In an effort to reinforce the growing influence of enhanced fiber networks globally, Nokia also unveiled a 25 Gbps symmetrical PON (passive optical network) solution.

The Zacks Consensus Estimate for total revenues of the company stands at $7,556 million, indicating a 1.2% decline from $7,646 million reported in the prior-year quarter primarily due to coronavirus-induced adversities. The consensus mark for earnings is currently pegged at 12 cents per share. It had reported 17 cents in the year-earlier quarter.

Earnings Whispers

Our proven model does not predict an earnings beat for Nokia this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%. 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 price-eps-surprise | Nokia Corporation Quote

Zacks Rank: Nokia currently has a Zacks Rank #3.

Stocks to Consider

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:

T-Mobile US, Inc. (TMUS - Free Report) is set to release quarterly numbers on Feb 4. It has an Earnings ESP of +11.17% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Earnings ESP for Cambium Networks Corporation (CMBM - Free Report) is +6.75% and it carries a Zacks Rank of 3. The company is set to report quarterly numbers on Feb 18.

The Earnings ESP for Arista Networks, Inc. (ANET - Free Report) is +0.76% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Feb 18.

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