Should I invest in Nokia shares after launching the share buyback program?

Nokia shares have weakened more than 10% since the beginning of the 2022 year, even though the company reported solid fourth-quarter results this month.

Nokia launched the first phase of its share buyback program

Nokia Corporation is a Finnish multinational telecommunications, information technology, and consumer electronics company that operates across over 100 countries. Nokia continues to expand its business, and shares of this company show potential for patient investors.

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Nokia reported fourth-quarter results at the beginning of February; total revenue has decreased by 2.1% Y/Y to €6.41 billion while the GAAP EPS was €0.13 (beats by €0.02).

Total revenue has decreased slightly above expectations (misses by €70 million), but the board of directors announced that the sales should grow faster than the market in the upcoming quarters. Pekka Lundmark, President and Chief Executive Officer of Nokia, said:

We had a strong Q4, 14.2% comparable operating margin. But again, because we had more stable seasonality this year, it was 190 basis points lower than the extremely high and strong Q4 that we had last year.

For the full year, the comparable operating margin was 12.5% which is a 300 basis points improvement over 2020. Nokia announced its 2022 guidance and reported that it expects net sales in the range from €22.6 billion to €23.8 billion.

Nokia ended the fiscal year with a €4.6 billion net cash position on its balance sheet, and the board of directors proposed a dividend authorization of €0.08/share.

It is important to mention that Nokia launched the first phase of its share buyback program, which started on February 14, 2022, and will end by December 22, 2022. During this period, the maximum number of shares that can be repurchased is 275 million shares, equal to ~5 % of the total number of Nokia shares.

Nokia has a high-equity capital structure, its current debt to equity ratio is below 0.5, and the company is in a good position to increase ambition level in technology leadership and also in the optical business.

Fundamentally looking, Nokia trades at less than eight times 2021 EBITDA, and with the market capitalization of €27.4 billion, shares of this company are reasonably valued.

€4 represents strong support

Nokia’s stock price has fallen more than 13% after reaching the highest level in 2022 of €5.76 on January 11, and the current share price could be a good entry price for long-term investors.

If the price falls even more in the upcoming period, every price in a range from €3.5 to €4.5 could be a very good opportunity to invest in Nokia stock.

Summary

Nokia reported solid fourth-quarter results this month and launched the first phase of its share buyback program, which started on February 14, 2022, and will end by December 22, 2022. Fundamentally, Nokia trades at less than eight times 2021 EBITDA, and the current share price could be a good entry for long-term investors.

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