Does Nokia’s Strong 23% Rally Signal Further Upside for Investors in 2025?

If you are weighing what to do with Nokia Oyj stock right now, you are not alone. The Finnish tech giant has caught the eye of many investors lately, and for good reason. After a strong recent run, Nokia’s stock price last closed at $4.88, up 7.4% in the past week and 23.4% over the past month. Year-to-date performance stands at 12.9%, with a 1-year gain of 18.0% and a 50.7% return over the last five years. Clearly, something has shifted in how the market perceives Nokia’s potential and risk.

Much of this momentum flows from increased optimism in the tech hardware sector as well as Nokia’s ongoing transformation in 5G infrastructure and network technology. Investors seem increasingly willing to bet on Nokia’s roadmap, with sentiment shifting as the industry adapts to fresh market developments and competition. Yet, even with the upswing, the valuation conversation is more nuanced than simply looking at price movement or headline news.

To cut through the noise, let’s take a close look at how Nokia lines up when measured by several different valuation approaches. On our six-point valuation check, Nokia is undervalued in two areas, giving it a value score of 2 out of 6. But as you will soon see, there is not only more to Nokia’s valuation than these traditional metrics; there is also a smarter way to get to the real story, which I will share at the end of this article.

Nokia Oyj scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

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

The Discounted Cash Flow (DCF) model estimates a company’s intrinsic value by projecting its future free cash flows and discounting them back to today's worth. For Nokia Oyj, this approach uses a two-stage model. It begins with six years of analyst forecasts and then relies on Simply Wall St to extrapolate the subsequent years.

Currently, Nokia’s last twelve months free cash flow stands at €1.51 Billion. Analysts expect strong cash flow into the medium term, projecting €1.86 Billion in 2026 and €2.24 Billion in 2027. From 2028 onward, projections become more conservative, with free cash flow gradually tapering to roughly €432 Million by 2035.

Using these projections, the DCF model arrives at an intrinsic value of €1.99 per share. Given the current share price of €4.88, this valuation implies that Nokia’s stock is trading at a premium of nearly 145.3 percent to its DCF-derived value. In plain terms, the DCF approach suggests Nokia is significantly overvalued at this price based on long-term cash flow estimates.

Result: OVERVALUED

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

Our Discounted Cash Flow (DCF) analysis suggests Nokia Oyj may be overvalued by 145.3%. Find undervalued stocks or create your own screener to find better value opportunities.

Approach 2: Nokia Oyj Price vs Earnings

For profitable companies like Nokia Oyj, the price-to-earnings (PE) ratio is a widely accepted and intuitive way to value a stock. This metric shows how much investors are willing to pay per euro of earnings, making it especially relevant when earnings are steady and positive.

Growth expectations and the level of risk a company faces help determine what a “normal” or “fair” PE ratio should be. Higher-growth, lower-risk businesses often command higher multiples as investors anticipate stronger future profits and feel more confident about those earnings materializing.

Currently, Nokia trades at a PE ratio of 29.1x. When set against the communications industry average of 35.0x and a peer average of 59.8x, Nokia appears less aggressively valued on this measure. However, it is also helpful to consider the Fair Ratio, in this case 28.3x, which is a proprietary benchmark from Simply Wall St. This Fair Ratio is tailored to account for the company’s growth prospects, risks, profit margins, scale, and industry context, providing a more nuanced benchmark than a broad peer or sector average.

By comparing Nokia's actual PE ratio (29.1x) to its Fair Ratio (28.3x), we see that the stock is priced essentially in line with expectations, reflecting the current balance of its strengths, risks, and growth profile.

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 that there is an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is your personal story about Nokia Oyj. It connects your perspective about the company's future, such as your preferred fair value and your own estimates of future revenue, earnings, and margins, to a clear financial forecast and valuation. Rather than relying only on static ratios, Narratives allow you to bridge the gap between a company's story and the numbers behind it, making investing less about guesswork and more about conviction.

Narratives are available on Simply Wall St’s Community page, making them an easy and accessible tool used by millions of investors. With a Narrative, you can quickly compare your outlook against Nokia's current share price. If your assumed fair value is higher, it may be a buy, and if it is lower, it may signal a sell. These Narratives refresh as new news or earnings are released, ensuring your analysis is always relevant. For example, some investors see long-term opportunity and set a target price as high as €5.75 thanks to expected demand for fiber and AI networks, while others are more cautious with a €3.00 fair value due to competition and margin pressure.

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.

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