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Nokia Corp (NOK): Will Q4 Earnings Disappoint Investors?

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Nokia Corporation (NOK - Free Report) is slated to report fourth-quarter 2016 financial numbers Feb 2.

In the last four quarters, the company’s bottom line matched the Zacks Consensus Estimate thrice and while surpassed on one occasion, resulting in an average beat of 10.42%.

Over the past three months, Nokia marked a growth of 3.95%, while the Zacks-categorized Wireless Equipment industry declined 3.64%.

Let’s see how things are shaping up for this announcement.

Factors at Play

We are concerned about the recent below-par performance of Nokia’s primary division – the Networks unit. Further, the company expects net sales in Nokia Networks unit to fall in 2016 due to the declining wireless infrastructure market, among other headwinds.

Meanwhile, we are also concerned about the outcome of the company's legal action against Apple Inc. (AAPL - Free Report) regarding patent infringement. The company also faces tough competition from peers like Cisco Systems, Inc. (CSCO - Free Report) , Motorola Solutions Inc. and InterDigital Inc.

However, we are positive on the company's plans to acquire Deepfield and Eta Devices and installation of the 4.5G wireless network infrastructure globally. The company’s efforts to provide the LTE-R mobile broadband network to Korea Rail Network Authority (“KRNA”) is also impressive.

Earnings Whispers

Our proven model does not conclusively show that Nokia is likely to beat the Zacks Consensus Estimate 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. Unfortunately, that is not the case here as elaborated below.

Zacks ESP: Nokia has an earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 8 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Nokia has a Zacks Rank #4 (Sell).

We caution investors against the stock going into the earnings announcement, as an Earnings ESP of 0.00% combined with an unfavorable Zacks Rank lowers the possibility of an earnings surprise.

Nokia Corporation Price and EPS Surprise

 

Nokia Corporation Price and EPS Surprise | Nokia Corporation Quote

A Key Pick

Here is a company that has the right combination of elements to post an earnings beat this quarter.

Seagate Technology plc (STX - Free Report) is likely to remain on the earnings beat track. Its earnings surpassed the Zacks Consensus Estimate in three of the previous four quarters, with an average beat of 3.28%. It currently has an Earnings ESP of +11.49% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

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