4. Nokia Oyj (NYSE:NOK)
Share Price: $4.28
Forward P/E Ratio: 11.11
Earnings Growth This Year: 19.40%
Number of Hedge Fund Holders: 18
Nokia Oyj (NYSE:NOK) is a Finnish company specializing in technology and services for the telecommunication and networking industry. Some of the major operations include network infrastructure comprising both wireless and wired communication and software solutions that help manage networks effectively. The company also develops new technologies related to the Internet of Things that help connect day-to-day appliances to the Internet.
Nokia Oyj (NYSE:NOK) has been facing challenges in terms of market weakness. As a result, its net sales for Q2 2024 declined 18% in constant currency. India was one of the major contributors to the decline. Although trading at a discounted forward P/E of 11, with earnings expected to grow at 19.40% during the year the stock still ranks as one of the worst affordable stocks under $10.
While it is true that the glory days of the company when it used to dominate as a prominent hardware maker are history, management is making efforts to strengthen its network infrastructure business. In an attempt to do that the company has announced divestment of ASN business and has shown an intent to purchase Infinera. Nokia Oyj (NYSE:NOK) is currently under an ongoing cost-saving transformation and the management has reiterated targeted savings of EUR 800 to EUR 1 200 million ($893.64 million to $1340.46 million) by 2026.
On the bright side, the order intake for the second quarter improved significantly, indicating an improved second half of the year. Taking confidence from improved order intake and free cash flow of $450 million during the quarter, management has kept its full-year guidance unchanged.
Nokia Oyj (NYSE:NOK) was held by 18 hedge funds in Q2 2024, with total stakes worth $418.70 million. Pzena Investment Management is the top shareholder of the company with a position worth more than $311.9 million.
Artisan International Value Fund made the following comment about Nokia Oyj (NYSE:NOK) in its second quarter 2023 investor letter:
“Nokia Oyj (NYSE:NOK) is the world’s third-largest provider of telecommunications equipment. The company sells its products to service providers, such as AT&T and Vodaphone. While we have held the stock, new management has simultaneously improved competitiveness and reduced costs—a remarkable achievement that has resulted in improved growth and profitability. Despite that, the share price has declined, and the valuation multiple has shrunk below 10X forward earnings. The reason is that telecommunications operators are cutting back on investment. Higher interest rates, inflation and competition are eating into customer cash flows, resulting in less capital spending. For now, Nokia will experience reduced demand. At some point, the ever-increasing need for wire and wireless bandwidth will force service providers to increase investment. In addition, Nokia’s market share is improving due to geopolitical changes and improved market competitiveness. The share price declined by 15% during the quarter.”
