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Nokia is slated to release its Q4 and full-year 2019 results on February 6, 2020. For FY 2019, Trefis estimates that the company will report:Revenues would
have increased by 0.5% year-on-year to €22.7 billion (slightly below the consensus estimate of €23 billion), primarily due to an increase in networking revenues.
EPS figure should have reduced to €0.20 ($0.23) from €0.23 in 2018 due to higher expenses. However, our EPS estimate is marginally above the consensus estimate of $0.22.
Further, we believe that stronger-than-expected earnings for FY 2019 are likely to overshadow the revenue decline and will likely result in Nokia’s stock trending higher once it announces earnings. Our forecast indicates that Nokia’s valuation is $5 a share, which is roughly 20% above the current market price.
(1) Revenues expected to be lower than the consensus estimates
Trefis estimates Nokia's's 2019 revenues to be €22.7 billion, lower than the consensus estimate of €23 billion
Total net revenue
(1) Networks €21.2 Bil (93%)
(2) Licensing €1.50 Bil (7%)
TOTAL €22.7 Bil
Consensus €23.0 Bil
Surprise -€(0.3) Bil
(2) EPS likely to beat consensus estimates
Nokia's 2019 earnings per share (EPS) expected to be $0.23 per Trefis analysis, 3% higher than the consensus estimate of $0.22 per share
Total Revenues €22.7 Bil
- Total Expenses €21.5 Bil(*)
Net Income €1.1 Bil(***)
÷ Shares Outstanding 5.6 Bil
EPS $0.23 (**)
(*) - The expense figure includes preferred dividend and other minority expenses
(**) - Adjusted for exchange rate
(***)- Numbers don't add up due to rounding
(3) Stock price estimate ~20% higher than the market price
Trefis' forecast for Nokia's 2019 earnings as well as P/E multiple, are higher than the market expectations, working out to a fair value of $5 for Nokia's stock as opposed to the current market price of around $4
Nokia's Share Price = [ A x B ]
2019(E)- EPS [ A]
Trailing P/E Multiple [B]
Detail about our forecast for Nokia's (1) Revenues, (2) EPS, and (3) P/E Multiple follow:
Trefis estimates Nokia’s 2019 revenues to be
€22.7 billion, below the consensus estimate of
€23 billion.Nokia has lost around €1 billion to its revenue over the last two years, largely due to declines in the Networks segment.However, we expect the Nokia revenues to grow slightly and add about €105 million in revenue in 2019 likely driven by the adoption of 5G technology.Nokia has been winning commercial 5G contracts and it's likely that this would have been the biggest growth driver.Moreover, Nokia enterprise has also been growing, adding new customers at a rapid pace. As demand for mission-critical networks increases, Nokia’s networking enterprise business will continue to grow.Although the company’s licensing revenues would have remained constant at €1.5 billion in 2019.For FY 2020, we expect Nokia’s revenue to increase by 0.8%, adding around €200 million in total revenues likely to be driven by steady growth across licensing and network segments
What about Revenues in 2020?
See Nokia Revenue - How Does Nokia Make Money?
We provide an interactive, in-depth view of the company's revenues along with our forecasts and a comparison of trends with peers Ericsson, Juniper and Cisco.
Key for 2020: We expect Nokia's revenue growth rate to remain flat in 2020, with revenue growing by just 0.8%.
What about Expenses and Earnings in 2020?
For 2020, we believe that an increase in revenues coupled with lower expenses will result in the net income margin figure expanding to 8.5%
(3) A trailing P/E multiple of 19.9x looks appropriate for Nokia s stock, which is higher than the current implied P/E multiple of 17x
We use our full cash flow model for Nokia to arrive at a P/E multiple of 19.9x for a price estimate of $5
Note: P/E Multiples are based on Share Price at the end of the year, and reported (or expected) Adjusted Earnings for the full year
Nokia P/E Multiple
Ericsson P/E Multiple
Juniper P/E Multiple
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