Assessing Nokia Stock After Recent Network Infrastructure Partnerships and a 6.8% Monthly Rally

Whether you’re holding Nokia Oyj stock, thinking about buying, or just following its story, you’ve probably noticed the price has taken a few interesting turns lately. Over the last thirty days, shares of Nokia rose 6.8%, a nice bump that stands out against a year-to-date decline of 8.3%. Pull the lens back even further and you’ll see it’s been a real roller coaster. The stock is up 35.0% over five years, but essentially flat in the past year at just 3.9%. That sort of movement suggests shifting opinions about what the company is worth, and why investors should care.

There’s more behind these moves than meets the eye. Recently, broader market developments, especially renewed interest in network infrastructure, have sparked optimism around telecom stocks like Nokia. As 5G rollouts pick up and industry spending cycles gain steam, investors are re-evaluating what Nokia’s assets and cash flows are actually worth, and what kind of risk is really in the stock now.

So, what does all this mean for valuation? If we score Nokia by six of the most common undervaluation checks, it passes three, earning it a value score of 3 out of 6. But how meaningful are these checks? Are they capturing the whole picture, or just scratching the surface? Up next, I’ll break down exactly how these valuation methods work, and hint at one powerful way to see if Nokia is truly undervalued or not.

Nokia Oyj delivered 3.9% returns over the last year. See how this stacks up to the rest of the Communications industry.

Approach 1: Nokia Oyj Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates what a company is really worth today by projecting its future cash flows and then discounting them back to their present value. This approach tries to answer, in practical terms, how much Nokia's expected cash generation over the next decade is worth if you had it all right now.

For Nokia, the current Free Cash Flow (FCF) stands at €1.51 billion. Analyst estimates are typically available only for the next five years, so projections further out are extrapolated based on trends and reasonable assumptions. Looking ahead, Simply Wall St projects Nokia’s Free Cash Flow for 2029 at about €1.40 billion, with similar levels expected early in the next decade. These figures offer a sense of both stability and slower growth in Nokia’s future cash generation.

Based on these projections and applying the 2 Stage Free Cash Flow to Equity model, the intrinsic value per share arrives at €3.76. Comparing this to the current market price, the stock appears to be 5.4% overvalued according to this DCF-based assessment. This does not indicate a distinct opportunity or risk; it implies that, at current levels, Nokia Oyj is trading close to its fair value as modeled.

Result: ABOUT RIGHT

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Nokia Oyj.

Simply Wall St performs a valuation analysis on every stock in the world every day (check out Nokia Oyj's valuation analysis). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes.

Approach 2: Nokia Oyj Price vs Earnings

The Price-to-Earnings (PE) ratio is a go-to valuation tool for profitable companies like Nokia Oyj because it directly compares a company's market value to its earnings, helping investors assess how much they are paying for each euro of profits. Profitable businesses generally see their PE ratios shaped by growth prospects and risks. Higher growth or lower risk tend to justify a higher ratio, while slower growth and greater risk push it lower.

Right now, Nokia trades on a PE ratio of 23.7x. That’s below both the average of its closest peers at 53.0x and the broader communications industry average of 35.7x. At first glance, this suggests Nokia may be undervalued versus its sector and competition, but there are important nuances that benchmarks alone cannot uncover.

This is where Simply Wall St’s proprietary “Fair Ratio” comes in, sitting at 29.8x for Nokia. Unlike raw industry or peer comparisons, the Fair Ratio takes into account the company's specific fundamentals, including its historic and forecasted earnings growth, profit margins, market cap, and unique risk profile. This context-driven approach offers a clearer standard for what is reasonable.

Comparing Nokia’s actual PE of 23.7x to its Fair Ratio of 29.8x, the stock appears slightly undervalued but not to a dramatic degree. Since the difference is within the 0.10x threshold, Nokia’s current valuation looks fair relative to its individual circumstances.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Nokia Oyj Narrative

Earlier we mentioned there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is simply your story and perspective on a company by connecting what you believe about Nokia Oyj’s future (like growth drivers, risks, and competitive strengths) to numbers such as fair value, forecasted revenues, and margins. Narratives transform investing from just crunching ratios or spreadsheets into a more holistic decision, letting you link Nokia’s evolving story to your own financial outlook and buying or selling decisions. Narratives are easy to build and update, available for millions of investors on Simply Wall St’s Community page, and are automatically refreshed when news, earnings, or company fundamentals change. By comparing your Narrative’s fair value to today’s share price, you can see if it’s time to act, hold, or reconsider your assumptions. For example, one investor may be optimistic about Nokia’s 5G and fiber expansion, targeting a fair value of €5.75, while another may be more cautious about competitive threats and see fair value at €3.00. Narratives keep you agile and confident, giving you a living framework to invest smarter, in line with what matters most to you. Do you think there's more to the story for Nokia Oyj? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com