Is Nokia Stock A Buy At $4?

Nokia stock has underperformed this year, declining by about 20% since early January compared to the broader S&P 500 which gained about 15% over the same period. The market for radio access equipment is slowing considerably, with major carriers in the U.S. pulling back on spending after years of heavy investments, concerns about the broader macro environment, and also as they work through equipment inventory that they previously built up. Nokia’s Q2 results were weaker than anticipated, with revenue falling by 2.7% year-over-year to Euro 5.71 billion ($6.33 billion), and adjusted earnings stood at Euro 0.07 per share ($0.08). Nokia has guided for weakening demand over the second half of this year, projecting full-year net sales of between Euro 23.2 billion and Euro 24.6 billion (between $25.2 billion and $26.7 billion), down 6% at the mid-point from its previous guidance. Nokia has also cut the upper end of its operating profit margin guidance, as it sees a weaker geographic mix, with developing markets such as India accounting for an increasing mix of sales.

Notably, NOK stock had a Sharpe Ratio of 0 since early 2017, which is lower than the figure of 0.6 for the S&P 500 Index over the same period. Compare this with the Sharpe of 1.2 for the Trefis Reinforced Value portfolio. Sharpe is a measure of return per unit of risk, and high-performance portfolios can provide the best of both worlds.