Nokia’s Q3 Earnings Outlook Amidst Top Line Contraction Concerns

Nokia Corporation NOK is prepared to unveil its third-quarter 2024 financial results on October 17, before the markets open. Its previous quarterly report showcased adjusted earnings of 6 cents per share.

The looming expectation is a year-over-year revenue decline for Nokia due to softness in demand across multiple business sectors. The company faces challenges from heightened competition, macroeconomic setbacks, and escalating geopolitical tensions. Nonetheless, a silver lining emerges in Nokia’s strategic endeavors to fortify its 5G ecosystem position through innovation and expanding its portfolio.

Key Elements in Action

During the third quarter, Nokia secured lucrative multi-year contracts, notably with AT&T Inc., to modernize fiber infrastructure and elevate network capabilities to meet the escalating need for enhanced broadband services. Engagements with Vodafone Idea Limited in India and MEO in Portugal for network upgrades further bolstered Nokia’s revenues.

Nokia also solidified market presence through collaborations with Telekom Malaysia and Homeplus in Taiwan, where cutting-edge network solutions were deployed to enhance connectivity and user experiences. Leveraging its 5G AirScale portfolio, Nokia clinched a deal with TiM Brasil, fortifying 5G network coverage in Brazil.

On the research front, Nokia Bell Labs partnered with e& to drive AI-based R&D initiatives across industrial sectors for a year. Despite these notable wins, Nokia faced headwinds such as sluggish 5G investments in various regions and stiff competition in the market, compounded by geopolitical uncertainties.

Projections estimate revenues from the Mobile Networks segment to decline by 13.6% year-over-year, while the Network Infrastructure segment is anticipated to witness a robust 21.9% revenue growth. Cloud & Network Services revenues are forecasted at €789.3 million ($867.4 million).

For the September Quarter, the consensus among analysts places Nokia’s total revenues at $5.10 billion, portraying a dip from the prior-year quarter’s $5.42 billion. The adjusted earnings per share are expected to rise to 7 cents from the previous year’s 5 cents.

Insights into Earnings

Analysts’ predictive modeling does not strongly suggest an earnings beat for Nokia in the impending release. For an earnings beat, a positive Earnings ESP combined with a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) is typically required. However, this synergy appears elusive at this juncture for Nokia.

Earnings ESP: The Earnings ESP for Nokia remains at 0.00%, with both the Most Accurate Estimate and the Zacks Consensus Estimate pegged at 7 cents.

Zacks Rank: Currently, Nokia holds a Zacks Rank #2.

Potential Stock Considerations

Here are a few companies that might pique your interest as they exhibit the right blend of factors conducive to an earnings beat:

Corning Incorporated GLW plans to announce its quarterly results on October 29. With an Earnings ESP of +1.16% and a Zacks Rank #3, Corning presents an optimistic outlook.

T-Mobile US, Inc. TMUS boasts an Earnings ESP of +0.70% alongside a Zacks Rank of 3. The company is scheduled to unveil its quarterly figures on October 23.

Qorvo Inc. QRVO presents an Earnings ESP of +0.16% and holds a Zacks Rank of 3. Investors can anticipate its quarterly report on November 06.

Note: €1 = $1.09893 (period average from July 1, 2024, to Sept. 30, 2024).