Will Nokia Corporation's (NOK) Q3 Earnings Disappoint?

Networking giant, Nokia (HE:NOKIA) Corporation (NYSE:NOK) is scheduled to report third-quarter 2016 results on Oct 27, before the market opens.

Last quarter, Nokia’s earnings were in line with the Zacks Consensus Estimate. The company surpassed estimates in two of the last four quarters with the average earnings beat of 13.54%.

Factors at Play

Nokia has been investing heavily in new technologies and products. We expect these initiatives to have an adverse impact on the company’s bottom line due to increased costs. We are also concerned about the underperformance of the Networks unit. Moreover, the company is stiff competition from peers like Cisco Systems, Inc. (NASDAQ:CSCO) and Motorola Solutions Inc. (NYSE:MSI) . The company’s globally diversified operations also expose it to adverse foreign exchange movements.

However, we expect Nokia to gain from synergies created through its acquisition of Withings S.A. and Alcatel-Lucent (PA:ALUA). We are also impressed with the company’s new range of products in the wireless segment and collaboration with China Telecom for the enhancement of 4G coverage in China.

Earnings Whispers

Our proven model does not conclusively show that Nokia is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below.

Zacks ESP:The Earnings ESP for Nokia is 0.00%, as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 5 cents. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.

Zacks Rank:Nokia carries a Zacks Rank # 4 (Sell).

Note that we caution against Sell-rated (#4 and 5) stocks going into an earnings announcement, especially if the company has been seeing negative estimate revisions.

Stock to Consider

Here is a company you may want to consider as our model shows it has the right combination of elements to post an earnings beat this quarter.

Sito Mobile Ltd. (NASDAQ:SITO) , which is expected to report third quarter earnings on Nov 22, has an earnings ESP of +100% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here. .

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