Rating Change #6

Nokia Oyj ( NOK) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Communications Equipment industry. The net income has significantly decreased by 353.9% when compared to the same quarter one year ago, falling from $487.90 million to -$1,238.73 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Communications Equipment industry and the overall market, NOKIA CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for NOKIA CORP is currently lower than what is desirable, coming in at 33.10%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -12.60% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to -$786.71 million or 220.62% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 54.09%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 353.84% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
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Nokia Corporation provides telecommunications infrastructure hardware, software, and services worldwide. The company offers smart phones and smart devices; and feature phones, and related services and applications. Nokia Oyj has a market cap of $19.25 billion and is part of the technology sector and telecommunications industry. Shares are down 20.7% year to date as of the close of trading on Friday.

You can view the full Nokia Oyj Ratings Report or get investment ideas from our investment research center.

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