Nokia (NOK) to Report Q4 Earnings: What’s in the Offing?

Nokia Corporation NOK is scheduled to report fourth-quarter 2017 financial numbers on Feb 1.

Last quarter, the company reported earnings (non-IFRS) per share of €0.09 (approximately 11 cents) that surpassed the Zacks Consensus Estimate of 6 cents. In the year-ago period, the company had reported earnings of €0.04 (5 cents) per share.

Net sales declined year over year to €5.5 billion (approximately $6.5 billion). However, the top line outpaced the Zacks Consensus Estimate of $6.41 billion but fell short of the year-ago figure of approximately $6.57 billion. This was because revenues were hurt by the Nokia Networks’ disappointing performance.

Let’s see how things shape up for this announcement.

Factors Likely at Play

The disappointing performance of Nokia’s primary division, the Networks unit, is likely to hurt results in the fourth quarter. Weakness in the Ultra Broadband Networks’ subgroup is likely to result in Nokia’s flagship division’s poor performance in the soon-to-be-reported quarter. The company also expects segmental results in the final quarter of 2017 to be hurt primarily due to competition in the Chinese market.

Furthermore, the top line in the fourth quarter might be hampered by adverse foreign currency movements since the company operates globally. However, Nokia’s revenues are likely to benefit from payments in the quarter, following a favorable verdict in a payment-related dispute with BlackBerry BB.

Additionally, Nokia’s technology segment is likely to perform well in the soon-to-be reported quarter, thereby aiding results.

Earnings Whispers

Our proven model does not conclusively show that Nokia is likely to beat estimates 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. But that is not the case here as elaborated below.

Zacks ESP: Nokia has an Earnings ESP of -14.29%. This is because the Most Accurate estimate is pegged at 9 cents, 2 cents below the Zacks Consensus Estimate. 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 #3, which increases the predictive power of ESP. However, the company’s negative ESP acts as a spoiler.

We caution against all Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Investors interested in the broader Computer and Technology sector may consider the following companies as they have the right combination of elements to post an earnings beat:

Harris Corporation HRS has an Earnings ESP of +0.11% and a Zacks Rank of 2. The company will report second-quarter fiscal 2018 earnings numbers on Jan 30. You can see the complete list of today’s Zacks #1 Rank stocks here.

Citrix Systems CTXS has an Earnings ESP of +0.52% and a Zacks Rank #3. The company will also report fourth-quarter earnings numbers on Jan 31.

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