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Will Modest Top-Line Growth Buoy Nokia (NOK) Q3 Earnings?

Nokia Corporation NOK is scheduled to report third-quarter 2020 results, before the opening bell, on Oct 29. In the last reported quarter, adjusted earnings beat the Zacks Consensus Estimate by 4 cents. In the third quarter, the company is likely to have recorded higher revenues year over year due to healthy demand for 5G telecommunications equipment for higher 5G deployments across the globe.

Factors at Play

In the third quarter, Nokia brought an end-to-end portfolio of high-performance LTE and 5G solutions to the market with the commercial availability of a new 5G standalone industrial-grade private wireless networking solution for enterprises. The company launched a new operating system with an advanced set of tools for data center networking to accelerate the expansion of cloud footprint and boost traffic growth. These initiatives are likely to be reflected in the upcoming results.

During the to-be-reported quarter, Nokia also ramped up the adoption of Open RAN (O-RAN) interfaces in its AirScale portfolio for enabling an open ecosystem of innovation, while ensuring network performance and security. The company took a giant step forward in global 5G network deployments by achieving 100% digitization of the related processes. The move is likely to accelerate time-to-market for the complex procedures involved in 5G deployment, thereby generating healthy ROI for the operators. This is likely to have been accretive to earnings in the third quarter.

Nokia’s 7705 SAR-Hmc wireless service aggregation router was certified for use on FirstNet, making it a perfect solution for enterprises and governments. The company collaborated with leading mobile network operator — United States Cellular Corporation — for the deployment of its AirScale mmWave radio products and power an advanced IoT and 5G ecosystem for its enterprise customers.

The company secured 17 new 5G deals in the third quarter of 2020, taking it tally to almost 100, which underscored its progress in strengthening the mobile radio product portfolio. Some of the notable deals inked during the quarter were with Singapore-based telecommunications firm StarHub, Indonesia’s 3 Indonesia, United Kingdom’s BT Group and Australia’s Optus.

The Zacks Consensus Estimate for total revenues of the company stands at $6,413 million, indicating a 1.4% improvement from $6,322 million reported in the prior-year quarter despite coronavirus-induced adversities. The consensus mark for earnings is currently pegged at 7 cents per share. It had reported 6 cents in the year-earlier quarter.

Key Developments in Q3

During the quarter, Nokia sold its Gainspeed portfolio along with all supporting technology and assets to Vecima Networks. The company, however, will retain its cable-related products and solutions. This includes mobile, routing, transport, fiber and fixed wireless access technology as well as network operations and customer experience-related solutions.

Earnings Whispers

Our proven model does not predict an earnings beat for Nokia for the third quarter. 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. This is 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-eps-surprise | Nokia Corporation Quote

Zacks Rank: Nokia has a Zacks Rank #3.

Stocks to Consider

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:

Motorola Solutions, Inc. MSI is set to release quarterly numbers on Oct 29. It has an Earnings ESP of +0.91% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Earnings ESP for Lumen Technologies, Inc. LUMN is +9.68% and it carries a Zacks Rank of 3. The company is set to report quarterly numbers on Nov 4.

The Earnings ESP for Watts Water Technologies, Inc. WTS is +7.51% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Nov 4.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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