For long-term investors, assessing earnings trend over time and against industry benchmarks is more beneficial than examining a single earnings announcement at a point in time. Investors may find my commentary, albeit very high-level and brief, on Nokia Corporation (HLSE:NOKIA) useful as an attempt to give more color around how Nokia is currently performing. Check out our latest analysis for Nokia
Was NOKIA weak performance lately part of a long-term decline?
I look at data from the most recent 12 months, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This technique allows me to examine various companies in a uniform manner using the latest information. For Nokia, its latest trailing-twelve-month earnings is -€1.47B, which compared to the prior year’s figure, has become more negative. Since these values are somewhat short-term, I’ve estimated an annualized five-year figure for NOKIA’s earnings, which stands at €36.89M.
We can further evaluate Nokia’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Nokia has seen an annual decline in revenue of -8.35%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Inspecting growth from a sector-level, the FI communications industry has been growing its average earnings by double-digit 11.16% in the past year, and 12.65% over the past half a decade. This means that any tailwind the industry is benefiting from, Nokia has not been able to gain as much as its average peer.
What does this mean?
Nokia’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. With companies that are currently loss-making, it is always difficult to forecast what will occur going forward, and when. The most insightful step is to examine company-specific issues Nokia may be facing and whether management guidance has steadily been met in the past. I suggest you continue to research Nokia to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for NOKIA’s future growth? Take a look at our free research report of analyst consensus for NOKIA’s outlook.
- Financial Health: Is NOKIA’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2017. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.