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Nokia Oyj ADR NOK

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Morningstar’s Analysis

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Nokia's 2021 Preliminary Results Include One-Offs Boosting Comparable Operating Margin

Mark Cash Senior Equity Analyst

Analyst Note

| Mark Cash |

We are raising our fair value estimate of no-moat Nokia to EUR 5.00 from EUR 4.90 (maintaining U.S. ADR at $5.70) after the company released preliminary 2021 results, and we view shares as fairly valued. Nokia's estimated revenue of EUR 22.2 billion for 2021 (2% year-over-year growth) matched our expectations, while an updated comparable operating margin range of 12.4%-12.6% for 2021 surpassed our anticipation (previous guidance was 10%-12% comparable operating margin). The upside in comparable operating margin is aided by venture fund investments, a one-off software contract in the year, bad debt provision reversals, and other one-time benefits. Nokia estimates these one-offs contributed about 150 basis points of the comparable operating margin for 2021.

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Company Profile

Business Description

Nokia is a leading vendor in the telecommunications equipment industry. The company's network business derives revenue from selling wireless and fixed-line hardware, software, and services. Nokia's technology segment licenses its patent portfolio to handset manufacturers and makes royalties from Nokia-branded cellphones. The company, headquartered in Espoo, Finland, operates on a global scale, with most of its revenue from communication service providers.

Karakaari 7
Espoo, FI-02610, Finland
T +358 104488000
Sector Technology
Industry Communication Equipment
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type
Employees 90,000