Nokia (NOK, Financial) shares saw a 2.69% decline today, influenced by the company's third-quarter earnings report, which revealed a year-over-year net sales drop of 8% to over 4.3 billion euros ($4.7 billion). Despite a 22% rise in net income to 358 million euros ($389 million), the performance fell short of analyst expectations, leading to the decrease in share price.
Currently trading at $4.34, Nokia (NOK, Financial) holds several financial warning signs. The company has a Price-to-Earnings (P/E) ratio nearing its 10-year high at 66.77, indicating potentially overvalued stock. Analysts have set a target price of $4.83, suggesting moderate upside potential. With a GF Value of $3.99, Nokia is considered to be fairly valued, aligning closely with its market price.
Nokia's financial health is mixed, as reflected by its medium warning signs and a severe Altman Z-score warning, indicating financial distress. The Piotroski F-Score, however, stands at 7, underscoring robust financial strength, and the Beneish M-Score suggests it is unlikely to be manipulating earnings.
Despite the challenges, Nokia exhibits some promising metrics. Its free cash flow was reported at 621 million euros ($676 million), and the company maintained its 2024 guidance, projecting an operating profit between 2.3 billion euros ($2.5 billion) and 2.9 billion euros ($3.2 billion). The free cash flow is expected to reach between 30% to 60% of the operating profit, highlighting its capacity to generate cash in the future.
While Nokia's stock price is close to a one-year high, caution is advised due to its high valuation ratios and potential financial risks. Investors should keep an eye on its network infrastructure growth and cash flow generation capabilities as indicators of future performance.
