Nokia (NOK) Stock Rising on Eden Rock Purchase

NEW YORK (TheStreet) -- Shares of Nokia Corp. (NOK) are higher by 2.37% to $7.35 in late morning trading on Wednesday, after the Finnish tech device company said it is acquiring the U.S.-based company Eden Rock Communications for an undisclosed amount in order to boost its multivendor SON radio optimization capabilities.

The company said the purchase "reaffirms its vision" of becoming the "vendor of choice" in this sector.

"The size of the optimization and SON market is expected to exceed EUR 5 billion globally by 2018. With this combination of capabilities, we will effectively address a key customer pain point - automated optimization of heterogeneous networks in a multivendor environment," Nokia Networks VP, CEM and OSS Peter Patomella said in a statement.

"By combining our products into one, we will accelerate the delivery of a compelling solution for this problem and provide best-in-class network performance and customer experience," Patomella added.

The transaction is expected to close during the 2015 third quarter.

Separately, TheStreet Ratings team rates NOKIA CORP as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate NOKIA CORP (NOK) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, notable return on equity, reasonable valuation levels, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself."

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.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Communications Equipment industry and the overall market, NOKIA CORP's return on equity exceeds that of both the industry average and the S&P 500.
  • Despite currently having a low debt-to-equity ratio of 0.31, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that NOK's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.51 is high and demonstrates strong liquidity.
  • NOKIA CORP has improved earnings per share by 25.0% 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, NOKIA CORP increased its bottom line by earning $0.37 versus $0.06 in the prior year. For the next year, the market is expecting a contraction of 13.5% in earnings ($0.32 versus $0.37).
  • You can view the full analysis from the report here: NOK Ratings Report

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