Buy, Sell, Or Hold Nokia Stock?

Stock Performance - Nokia stock has increased by 37% since January 2024, outperforming the S&P 500 which gained 22% over the same period [1] - Ericsson stock also increased by 36% during the same period [1] - Nokia's annual returns have been volatile: 59% in 2021, -24% in 2022, -24% in 2023, and 34% in 2024 [2] Financial Results - Nokia's Q3 2024 net sales declined 8% y-o-y to €4.3 billion ($4.7 billion), but net income increased 22% to €358 million ($389 million) [1] - Earnings per share were €0.06 ($0.07) [1] - Gross margin improvement and cost management helped mitigate slower sales recovery [1] Regional Sales Dynamics - Sales to the U.S. market declined due to customers working through existing 5G equipment inventory [1] - Sales to India surged significantly due to accelerating 5G deployments [1] Guidance and Valuation - Nokia projects FY 2024 operating profit between €2.3 billion to €2.9 billion ($2.5 billion to $3.2 billion) [3] - Full-year free cash flow is expected to represent 30% to 60% of operating profit [3] - Nokia stock trades at 11x consensus 2025 earnings, compared to Ericsson's 15x forward earnings [4] - The company is valued at $4.52 per share, in line with the current market price of $4.51 [4] Business Diversification - Nokia has seen increased demand in optical networks, IP networks, and submarine networks [4] - The company's presence in the fixed-line space may help handle a potential slowdown in wireless infrastructure spending [4]