Opinion on  Nokia Corp (NOK)     Sector: Technology  >  Industry: Communications Equipment
Why Nokia is a buy?

Nokia is the largest mobile handset manufacturer in the world with a global market share of close to 40% in 2007. The company mainly operates in Europe, Asian Pacific and the Emerging markets.

Nokia has the highest profit margins among all cell phone producers  and its profit margins is in the range of 15%-20% over the last 5 years. The company also managed to achieve high return of equity ratio  above 25% over the last 5 years. This is a remarkable achievement as Nokia does not have a leveraged balance sheet.

Earnings growth is robust for the company in the last 2 years and EPS growth in 2006 was 40% and EPS growth in 2007 was 91.3%. Analysts  covering Nokia currently expects the EPS to grow 36% in 2008.  However, the earnings estimate for 2008 might be guided down by analyst in the coming months as the global economy slows.

Nokia stock dropped about 25% this year and it is trading at a good entry point for long term investors. TTM P/E has falls to the low range of 7-14 and MRQ P/B ratio is the lowest in 5 years at 5X. The stock is attractive with a dividends of close to 3% and TTM P/E of 10.  At $28, Nokia is a good  buy  considering its strong market positions, especially the emerging markets, its strong balance sheet and its operating efficiency.

Revenue by sectors:
Mobile Phone Group: 49%
Multimedia Group: 21%                       
Enterprise Solutions Group: 4%
Network Group: 26%

Markets of Mobile devices:
Europe: 28%
Asia Pacific: 25%
US: 5%
Strong positions in China and emerging markets

Stock Information:
                                 2002    2003       2004       2005        2006      2007     2008
High                   $27.06    $18.75    $23.52    $18.82    $23.46    $42.22    $42
Low                    $10.51    $12.33    $10.89    $13.92    $17.65    $18.87    $24
PE High             36          20         25          19          17          16
PE Low              14          13         11          14          13          7            

Current TTM P/E 9.6
Forward P/E 11.5

Earnings Growth:
2008 Forcast 36%
2007 91.3%
2006 39.39%
2005 4.21%
2004 1.06%
2003 25.33%

Net Profit Margin
2007 22.1%
2006 16.4%
2005 16.5%
2004 17.8%
2003 21.7%

Market share in global handset market:
2007 38.4%
2006 35.5%

Leverage: No long term debt

Return on Equity
2007: 55%
2006: 36%
2005: 29.4%
2004: 23.5%
2003:  27%

Price to book value
Current MRQ P/B 4.82
2007 16.17
2006  10.52
2005   9.69
2004   7.72
2003   8.24
2002   8.12