Should You Reassess Nokia After Its Recent 20% Share Price Drop?

• Curious if Nokia Oyj’s stock is a genuine bargain or just hype? You are in the right place for a smart, down-to-earth look at whether it is really undervalued right now.
• After a solid year-to-date climb of 21.6%, and a 36.3% gain over the last twelve months, Nokia’s latest price moves—including the sharp 20.3% drop in the past month—are keeping value-focused investors on their toes.
• Recent headlines have highlighted ongoing 5G network contracts and the company’s push into new markets, which have driven much of the optimism even as global tech sentiment remains mixed. Meanwhile, regulatory discussions in Europe and major network rollouts are fueling conversations about how the company is positioned for both risk and opportunity.
• Nokia currently lands a 3/6 on our valuation checklist, so it is neither a slam-dunk bargain nor wildly overvalued. Next, we will unpack what this score actually means using a few common valuation methods, and later reveal why there may be an even smarter way to judge value.

Nokia Oyj delivered 36.3% 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 works by estimating all the cash Nokia Oyj is expected to generate in the future and then "discounts" those cash flows back to today to determine what the business is really worth. This approach helps investors cut through market noise and focus on the company’s underlying ability to create value.

Currently, Nokia’s annual Free Cash Flow stands at approximately €1.33 Billion. Analysts project Free Cash Flow growth over the next several years, with estimates reaching €1.87 Billion in 2026 and €2.24 Billion in 2027. However, by 2029, projections based on fewer estimates and more extrapolations see FCF falling to around €823 Million.

When Simply Wall St discounts all of these expected cash flows back to the present, they arrive at an estimated fair value for Nokia of €1.99 per share. Given the most recent stock price, the implied intrinsic discount from this DCF calculation is -163.9%. This means the stock is trading at a much higher price than what the DCF model suggests it is really worth.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Nokia Oyj may be overvalued by 163.9%. Discover 928 undervalued stocks or create your own screener to find better value opportunities.

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

Approach 2: Nokia Oyj Price vs Earnings

The Price-to-Earnings (PE) ratio is a classic metric for valuing profitable companies like Nokia Oyj, as it links share price directly to the company’s earnings. This measure is particularly useful for investors because it reflects how much others are willing to pay today for a euro of future profit. Generally, higher growth prospects and lower perceived risk justify a higher PE ratio, while slower growth or higher risk warrant a lower multiple.

Nokia’s current PE ratio is 34.6x. For context, this sits just above the Communications industry average of 34.4x, but well below the broader peer average of 72.9x. However, direct comparisons to industry or peers can sometimes overlook what truly sets a business apart in terms of growth, risk, and profitability.

This is where Simply Wall St's “Fair Ratio” comes in, calculated based on Nokia’s specific earnings growth rate, its profit margins, market cap, and the unique risks associated with its business. The Fair Ratio gives investors a custom-fit benchmark that is more meaningful than off-the-shelf comparisons. For Nokia, the Fair Ratio works out to 35.7x.

Comparing Nokia’s actual PE ratio of 34.6x to its Fair Ratio of 35.7x reveals the stock is valued almost exactly where it should be based on those fundamentals. There is less than a 0.10 point difference between the two, which suggests the market's pricing is well-aligned with the company’s outlook right now.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1440 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 us introduce you to Narratives, Simply Wall St’s unique system for connecting your story about a company directly to its numbers and fair value.

A Narrative is your perspective or thesis on a company, captured as a story behind the business’s financial forecasts, including assumptions for future revenue, profit margins, and fair value. This helps you move beyond averages by focusing on what you believe is likely to happen.

Narratives are designed to be easy, interactive, and accessible right within the Simply Wall St Community page. Millions of investors use them to clearly articulate why they believe a stock is under or overvalued.

By writing or following a Narrative, you link a company’s real-world story, from optimism about 5G opportunities to concerns over competition, to a financial outlook. You can immediately see a fair value estimate to compare against the current price to help decide when to buy or sell.

This is powerful because Narratives update dynamically when new earnings or news breaks, letting you adjust your view in real time as the facts change.

For example, some Nokia Narratives assume robust growth in network infrastructure and set a bullish fair value of €5.75, while others are more cautious and arrive at just €3.00. This shows that everyone’s story leads to a different price and a more personal investment decision.

Do you think there's more to the story for Nokia Oyj? Head over to our Community to see what others are saying!

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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