Shares of wireless industry veteran Nokia (NOK +3.61%) had a great day on Thursday. Following a robust earnings release early in the morning, the Finnish company's stock jumped as much as 9.5%. It had cooled off somewhat to a 7.3% gain by 1 p.m. ET.
A mixed bag with a positive outlook
The average analyst expected fourth-quarter earnings near 0.14 euros per diluted share (approximately $0.15) on revenue in the neighborhood of 6.2 billion euros (around $6.46 billion). Nokia fell short of the top-line target with net sales of 5.98 billion. It also exceeded the consensus earnings target with earnings of 0.15 euros per share (approximately $0.16).
So the headline numbers were a mixed bag, but that wasn't the whole story. Nokia also offered financial guidance for 2025 and 2026. The guidance targets at least $990 million of free cash flow (FCF) this year and richer operating margins in the long run.
NYSE: NOK
Key Data Points
Nokia investors love those cash flows
Nokia's stock nearly set a new two-year high at the market open. Investors have started to forgive the company for a growing string of revenue slowdowns, starting in the summer of 2023. It helps that Nokia's FCF has been consistently strong in recent reports, including the forward-looking guidance given today.
Commercial 6G networks are still about five years away, so Nokia continues to rely on 4G and 5G networks for the foreseeable future. Technical improvements and a more mature manufacturing pipeline should help Nokia grow its profit margins in the near term. Meanwhile, the stock trades at an affordable 13 times next-year earnings estimates or 6.5 times trailing FCF.
