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Nokia (NOK) Gears Up for Q3 Earnings: What's in the Offing?

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Nokia Corporation NOK is scheduled to report third-quarter 2021 results, before the opening bell, on Oct 28. In the last reported quarter, adjusted earnings surpassed the Zacks Consensus Estimate by 5 cents. The company delivered an earnings surprise of 83.3% in the previous quarter, thereby pulling off a trailing four-quarter earnings surprise of 202.7%, on average.

The Finland-based telco equipment vendor is expected to have recorded lower revenues on a year-over-year basis due to the COVID-19 adversities. However, robust 5G growth supported by favorable product and regional mix across the Mobile Networks and Network Infrastructure segments is likely to have boosted its operations. Thanks to back-to-back innovative product launches, the tech giant’s margins might have increased on account of cost-reduction initiatives and strong cash generation. Private wireless strength and solid liquidity position with a thriving partner ecosystem are likely to have acted as major tailwinds.

With a resilient business model, Nokia’s sales growth is also likely to have been bolstered by higher 5G ReefShark shipments. The company is focused on its three-phased strategy to achieve sustainable, profitable growth, and technology leadership. Further, financial discipline, sharpened customer focus, and improvements across business groups might have strengthened its competitiveness. Increased investments in 5G R&D, fueled by healthy demand for 5G telecommunications equipment for higher deployments, are expected to have driven its momentum across the globe.

Factors at Play

During the quarter under review, Nokia teamed up with Telecom Armenia to launch gigabit broadband services over a passive optical network (PON) in the Asian country. Per the deal, Telecom Armenia will deploy Nokia’s GPON and XGS-PON fiber equipment along with its Wi-Fi Beacons and Altiplano management platform. TPG Telecom selected Nokia to deploy a live 5G standalone (SA) network on the 700MHz spectrum band in Australia. The network will enable TPG Telecom to provide wide outdoor 5G services and deep indoor 5G coverage in urban and suburban areas on the back of equipment from Nokia’s ReefShark-powered AirScale product portfolio.

The Finland-based telco equipment vendor provided Red Electrica de Espana, a Spain-based electricity transmission system operator, with an IP/MPLS network and Dense Wave Division Multiplexing optical transport network. Nokia’s IP/MPLS and optical transport networks improve efficiency, expand broadband services, and enable distribution of renewable power. It also inked a multi-year subscription contract with a leading supplier of robot-based automation solutions — KUKA — to install its avant-garde 5G SA private wireless networking in the latter’s Smart Production and Development Center in Augsburg, Germany. The incorporation of the 5G technology in KUKA’s intelligent robotics and automation solutions will empower automation manufacturers to leverage the same in modern industrial applications.

It expanded its relationship with channel partner and service integrator Xantaro. Xantaro leveraged Nokia’s IP and Optical solutions to deliver Wi-Fi 6 and mesh Wi-Fi coverage inside buildings. Under this project, the companies will connect more than 2 million homes across the U.K. with a broadband speed of up to 10 gigabit per second. Nokia also joined forces with Export Development Canada to tap into probable investment opportunities across the globe for 5G deployment and network infrastructure upgrades. The three-year deal with the state-owned enterprise seeks to put various Canada-based firms on the global map as well as help Nokia gain more businesses with a plethora of finance and insurance solutions.

During the quarter-to-be-reported, the Nordic telco was selected by DELTA Fiber to provide a next-generation optical transport network that will manage the latter’s increased traffic and expansion of its Fiber to the Home (FTTH) rollout. It partnered with the City of Melbourne to conduct a pilot run using Nokia Scene Analytics artificial intelligence technology to tackle the issue of waste dumping more efficiently and keep laneways safe and clean. Nokia inked a deal with A1 Telekom Austria Group to expand the carrier’s 5G services across Bulgaria, Serbia, and Slovenia while strengthening its presence in the domestic market. The multi-country deal with the America Movil, S.A.B. de C.V. AMX unit seeks to offer commercial 5G and premium digital services in the near future.

It secured a deal with Union Wireless to replace the latter’s existing RAN equipment with its avant-garde AirScale 4G/5G radio portfolio. The partnership is part of Union Wireless’ “Rip and Replace” initiative. Union Wireless will initially deploy 4G service that can further be upgraded to 5G for an enhanced subscriber experience while complying with the Secure and Trusted Telecommunications Act. Nokia’s AirScale 4G/5G radios will be installed across Colorado, Wyoming, Idaho, and Utah. Moreover, Nokia extended its partnership with United States Cellular Corporation USM for the deployment of 5G SA core network. The deployment initiative enabled the telco to capitalize on Nokia’s diverse portfolio of hardware, software, and services for the proper functioning of the 5G SA core network.

The company joined forces with Telekom Slovenije to power the latter’s FTTH network with the deployment of avant-garde broadband equipment. The deployment, which will bring 10Gb/s fiber to Slovenia, is scheduled to commence this year. Further, Nokia launched a charging configurator microservice for its existing Nokia Converged Charging (NCC) monetization solution. NCC is specifically designed for the 5G economy and provides real-time charging capabilities that enable communications service providers to monetize new revenue opportunities and offer a better experience to their customers. With more than 240 commercial 5G agreements, Nokia currently has 72 live 5G networks, thereby marking a significant feat in the highly competitive market.

Coveted deals with a comprehensive list of leading entities like Lightspeed Broadband, Africell, Openreach, Taiwan Star Telecom, Vodafone, Empire Access, Taiwan Mobile, United Group, Vocus, Indosat Mega Media, Asiacell, NorthC, Infradata, MTN, NL-ix, Uniti Group, African Telecommunications Union, Spark, AngloGold Ashanti Colombia and Indosat Ooredoo are likely to have positioned Nokia for the ongoing technology cycle, given the strength of its end-to-end portfolio. These developments are likely to have had a positive impact on its third-quarter performance despite challenges stemming from the COVID-19 pandemic.

The Zacks Consensus Estimate for total revenues of the company stands at $6,056 million, indicating a 2.1% decrease from $6,188 million reported in the prior-year quarter. The consensus mark for adjusted earnings per share is pegged at 8 cents. It had reported 6 cents in the year-earlier quarter.

Earnings Whispers

Our proven model doesn’t conclusively predict an earnings beat for Nokia this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Nokia Corporation Price and EPS Surprise

Nokia Corporation Price and EPS Surprise
Nokia Corporation Price and EPS Surprise

Nokia Corporation price-eps-surprise | Nokia Corporation Quote

Zacks Rank: Nokia currently has a Zacks Rank #3.

Stock to Consider

Here is a company you may want to consider, as our model shows that it has the right combination of elements to post an earnings beat this season:

SM Energy Company SM is slated to release third-quarter 2021 results on Oct 28. It has an Earnings ESP of +34.21% and currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.


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