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Why Nokia Stock Surged Today

By Timothy Green - Jul 25, 2019 at 4:55PM

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Solid growth set the stage for an improved second half.

What happened

Shares of Nokia ( NOK 3.24% ) rose on Thursday after the company reported its second-quarter results. Nokia beat analyst estimates across the board and reiterated its full-year guidance, although it also pointed to a few risks that could threaten its outlook. The stock was up about 10.3% at 3:45 p.m. EDT.

So what

Nokia reported second-quarter revenue of 5.69 billion euros, up 7.2% year over year and 290 million euros above the average analyst estimate. The networks segment, which is responsible for most of Nokia's revenue, showed solid 7% revenue growth from the prior-year period.

A rising chart.

Image source: Getty Images.

Non-IFRS (adjusted) earnings per share (EPS) came in at 0.05 euros, up from 0.03 euros in the prior-year period and 0.02 euros higher than analysts were expecting. "Nokia delivered a strong second quarter, driven by 5G demand, a competitive end-to-end portfolio and strengthened operational execution," said Nokia CEO Rajeev Suri in prepared remarks.

Now what

Nokia maintained its full-year outlook, calling for non-IFRS EPS between 0.25 euros and 0.29 euros, non-IFRS operating margin between 9% and 12%, and "slightly positive" recurring cash flow.

This guidance depends on Nokia delivering solid second-half results, which is not a guarantee. The company pointed to execution demands, trade-related uncertainty, and challenges in the China market as key risks going forward.

While Nokia has work to do to hit its full-year guidance, a solid second quarter was enough to send the stock soaring.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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