Ever since Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) exited its loss-making handset business, financial analysts have been positively revising their earnings growth estimates. Over the last three months, 29 research firms covering the stock have provided earnings estimates up until FY2016. Switzerland-based The Screener says that analysts have positively revised their estimates for Nokia by 1.9% in the last seven weeks. This positive pressure on growth expectations has been visible since January 24 and confirms the positive technical trend.
Nokia’s mid-term technical trend positive
Since May 23, the mid-term technical trend has been positive. Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V)’s adjusted technical reverse point is €5.36, about 10% lower than the current market price. The Finnish company’s 4-week relative performance against DJ Stoxx 600 index is 7.9%. The positive technical trend confirms investors’ interest in Nokia and validates this overperformance.
To figure out whether Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) is fairly valued, The Screener used Peter Lynch’s popular method of comparing projected earnings growth and dividend with the estimated P/E ratio. It indicates that the Finnish networking giant is fundamentally undervalued, and its valuation is less attractive than the aggregate European technology sector. The “projected earnings growth+ dividend/ estimated price earnings” ratio greater than 1.6 means that the projected earnings growth is a result of the base effect. That means Nokia is in a turnaround situation.
Nokia falls in the average risk zone
The Screener says that Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) stock is in the average risk zone, and has been so since November 2013, two months after Microsoft Corporation (NASDAQ:MSFT) announced the acquisition of the Finnish company’s handset business. A beta of 1.61 suggests that for every 1% variation in the index, Nokia stock varies by 1.61% on average.
The “Bear Market Factor” indicates the behavior of a stock in falling markets. In this context, Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) declines in the same proportion as the DJ Stoxx 600 index. Meanwhile, the “Bad News Factor” shows how a stock behaves in rising markets. In this situation, Nokia deviates from the markets by -2.55%. Volatility can also be used as a risk factor. Nokia’s one-month annualized volatility is 33.3% compared to 7.5% for the DJ Stoxx 600 index. That means Nokia is a relatively risky stock.
Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) shares fell 1.73% to $7.96 in pre-market trading Tuesday.