NEW YORK (TheStreet) -- Nokia (NOK) - Get Report shares are declining by 1% to $6.55 on Wednesday, one day ahead of the company's fiscal 2015 second quarter earnings results due before the market opens tomorrow.
Analysts are expecting the company's earnings and revenue to decline year-over-year.
For the latest quarter, analysts are expecting the company to report earnings of 6 cents per share on revenue of $3.55 billion, according to analysts surveyed by Thomson Reuters.
In the same period the previous year, the company reported earnings of 8 cents per share on revenue of $4.03 billion.
The company is heavily investing in research and development, which will put a dent on the company's cash flow. Also, the company will be acquiring French global telecommunications equipment company Alcatel-Lucent (ALU) for $16.6 billion, which will further increase Nokia's debt, according to Zacks Equity Research.
Also, the company today launched OZO, a virtual reality camera designed to make 3D movies and games. It's the first commercially available virtual reality camera, Nokia stated.
Separately, TheStreet Ratings team rates NOKIA CORP as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate NOKIA CORP (NOK) a HOLD. The primary factors that have impacted our rating are mixed, some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, notable return on equity and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Communications Equipment industry. The net income increased by 157.7% when compared to the same quarter one year prior, rising from -$329.27 million to $190.12 million.
- The current debt-to-equity ratio, 0.31, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, NOK has a quick ratio of 1.51, which demonstrates the ability of the company to cover short-term liquidity needs.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 11.2%. Since the same quarter one year prior, revenues slightly dropped by 7.9%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- Net operating cash flow has decreased to -$213.75 million or 12.42% when compared to the same quarter last year. Despite a decrease in cash flow NOKIA CORP is still fairing well by exceeding its industry average cash flow growth rate of -22.44%.
- NOK has underperformed the S&P 500 Index, declining 12.50% from its price level of one year ago. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- You can view the full analysis from the report here: NOK Ratings Report