Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) shares declined 2 percent in early trading on Monday, but overall, investors remain interested in the company, according to theScreener. This week’s updated report suggests that the company is fundamentally undervalued in comparison with its theoretical fair price. However, global evaluation of Nokia has been downgraded from slightly positive to neutral this morning.
Determining Nokia’s value
Analysts who compile theScreener use Peter Lynch’s methodology to determine Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V)’s fair value. This compares the company’s projected earnings growth and dividend with its estimated price earnings ratio. They said by adding Nokia’s forecasted growth and estimated dividend yield over estimated price earnings ratio, they receive a value of 1.6. According to the report, this suggests that Nokia is indeed in a turnaround situation.
The analysts call Nokia’s fundamental price potential “good, even if other stocks in the same industry group present an even better valuation.”
Analysts revising Nokia estimates upward
Analysts at more than one firm have revised their estimates for Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) upward recently. An average of 25 analysts are following and providing estimates for the Finnish company. On average, they positively revised their earnings growth estimates by 3.8 percent, compared with seven weeks ago.
theScreener has noted this positive trend since July 16 and say that investor interest in the company became especially strong on Sept. 3, which was when it announced that Microsoft Corporation (NASDAQ:MSFT) would buy its devices division.
Risks involved in investing in Nokia
According to the report, one area of concern is that the risk involved in investing in Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) has been increased from medium to high, as of Friday. Nonetheless, they say the technical trend surrounding the company’s stock is positive, which validates the company’s over-performance. They note that even though analyst views of Nokia are being revised positively, the company’s environment is being negatively revised, suggesting that investors and analysts continue to remain rather positive on the company.
Nokia has recently been at the center of a public outcry over the severance payment to CEO Stephen Elop, who is going to Microsoft along with the company’s devices division. Nonetheless, the company continues to churn out new devices, with six of them expected to be unveiled in October.