What Is Fueling Nokia’s 50% Stock Price Increase?

Nokia stock (NYSE: NOK) has outperformed since the beginning of 2024, increasing by about 52% (Feb. 20) since January 2024 compared to the broader S&P 500 which gained about 28% over the same period. Similarly, Nokia’s peer Ericsson stock (NASDAQ: ERIC) is up 33% during the same period. So, what’s happening here?

Nokia delivered a strong Q4 earnings beat, with Q4 EPS of €0.18 surpassing analyst forecasts of €0.14. This compared to earnings of €0.10 per share in the same period last year. Although revenue fell slightly short of expectations (€5.98 billion (around $6.5 billion). vs. €6.00 billion), it grew 10% y-o-y in Q4. However, the company’s full-year revenues were down 9% y-o-y to €19.2 billion, due to segment-specific revenue challenges. The company’s core mobile networks unit struggled in full-year 2024 sales due to a 21% y-o-y decline in sales, which was mainly due to reduced activities in India and North America. Network infrastructure and Cloud network services revenues were down 6% y-o-y, each, due to weakness in demand for internet protocol, particularly in the Americas and EMEA region. Nokia Technologies emerged as the top performer segment and experienced a remarkable 78% increase in net sales, largely due to new licensing agreements, supporting the company’s strategy to leverage its intellectual property. Despite revenue challenges, Nokia’s full-year profitability increased by 40% in FY 2024. The company’s proactive cost management and gross margin gains have offset the impact of slower sales recovery. Separately, if you want upside with a smoother ride than an individual stock, consider the High Quality portfolio, which has outperformed the S&P, and clocked >91% returns since inception.

Image by Hermann Traub from Pixabay

Nokia’s sales mix has shifted in recent quarters, driven by regional variations. Notably, U.S. sales have declined as customers work through existing 5G equipment inventory. Looking ahead, Nokia has issued guidance for FY 2025, projecting operating profit to fall within a range of €1.9 billion to €2.4 billion ($2.1 billion to $2.5 billion). Additionally, the company anticipates full-year free cash flow to represent 50% to 80% of operating profit. For 2026, the company anticipates operating margins above 13% and free cash flow representing 55% to 85% of operating profit.

The increase in NOK stock over the last 4-year period has been far from consistent, with annual returns being considerably more volatile than the S&P 500. Returns for the stock were 59% in 2021, -24% in 2022, -24% in 2023, and 34% in 2024. The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, is considerably less volatile. And it has comfortably outperformed the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride as evident in HQ Portfolio performance metrics.

So is Nokia stock worth a look at current levels of about $4.99 per share? (Feb 20) Although growth is likely to remain elusive this year, with historical risk-adjusted returns appearing weak, there are still a few reasons to consider Nokia stock. Nokia’s valuation appears reasonably priced, with the stock trading at about 15x consensus 2025 earnings. This compares to Ericsson which trades at about 17x forward earnings. Nokia might also be a bit better equipped to handle a potential slowdown in wireless infrastructure spending, given the company’s presence in the fixed-line space. We value Nokia stock at $5.01 per share, in line with the current market price. See our analysis on Nokia Valuation: Expensive or Cheap for more details on what’s driving our price estimate for the stock.

[1] Returns as of 2/21/2025
[2] Cumulative total returns since the end of 2016

Invest with Trefis Market-Beating Portfolios
See all Trefis Price Estimates