Nokia (NOK) Stock Declines Despite 2015 Operating Margin Guidance

NEW YORK (TheStreet) -- Shares of Nokia  (NOK) fell 5.57% to $7.80 in morning trading Friday despite the Finnish communications company's increasing its anticipated operating margins for the full year 2015.

Nokia said at its capital markets day that it expects operating margins in the range of 8% to 11% on a non-international financial reporting standards basis. Many analysts expected the upgrade, as Nokia reported operating margin of 11.4% in the first nine months of 2014.

Nokia added it expects its Nokia Networks division to increase sales year-over-year for the full year 2015. 

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More than 19.1 million shares had changed hands as of 10:46 a.m., compared to the daily average volume of 18,854,600.

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 impressive record of earnings per share growth, compelling growth in net income and good cash flow from operations. However, as a counter to these strengths, we find that the stock has experienced relatively poor performance when compared with the S&P 500 during the past year."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • NOKIA CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, NOKIA CORP turned its bottom line around by earning $0.06 versus -$1.11 in the prior year. This year, the market expects an improvement in earnings ($0.36 versus $0.06).
  • 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 569.1% when compared to the same quarter one year prior, rising from -$149.37 million to $700.76 million.
  • 46.97% is the gross profit margin for NOKIA CORP which we consider to be strong. Regardless of NOK's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 19.23% trails the industry average.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. When compared to other companies in the Communications Equipment industry and the overall market, NOKIA CORP's return on equity is below that of both the industry average and the S&P 500.
  • In its most recent trading session, NOK has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry, implying reduced upside potential.
  • You can view the full analysis from the report here: NOK Ratings Report

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