Intrinsic value of Nokia ADR - NOK

Previous Close

$4.68

  Intrinsic Value

$8.37

stock screener

  Rating & Target

str. buy

+79%

Previous close

$4.68

 
Intrinsic value

$8.37

 
Up/down potential

+79%

 
Rating

str. buy

We calculate the intrinsic value of NOK stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 27.5

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  89.05
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  24,939
  25,438
  26,023
  26,692
  27,442
  28,274
  29,187
  30,181
  31,257
  32,417
  33,661
  34,992
  36,412
  37,924
  39,531
  41,236
  43,043
  44,956
  46,979
  49,116
  51,373
  53,754
  56,266
  58,913
  61,702
  64,639
  67,732
  70,987
  74,413
  78,016
  81,807
Variable operating expenses, $m
 
  21,966
  22,457
  23,019
  23,650
  24,348
  25,115
  25,950
  26,853
  27,827
  28,871
  29,385
  30,578
  31,847
  33,197
  34,629
  36,147
  37,753
  39,452
  41,247
  43,142
  45,142
  47,250
  49,473
  51,816
  54,282
  56,880
  59,613
  62,490
  65,516
  68,700
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  26,100
  21,966
  22,457
  23,019
  23,650
  24,348
  25,115
  25,950
  26,853
  27,827
  28,871
  29,385
  30,578
  31,847
  33,197
  34,629
  36,147
  37,753
  39,452
  41,247
  43,142
  45,142
  47,250
  49,473
  51,816
  54,282
  56,880
  59,613
  62,490
  65,516
  68,700
Operating income, $m
  -1,161
  3,472
  3,565
  3,673
  3,793
  3,926
  4,072
  4,232
  4,404
  4,590
  4,789
  5,606
  5,834
  6,076
  6,334
  6,607
  6,896
  7,203
  7,527
  7,870
  8,231
  8,613
  9,015
  9,439
  9,886
  10,357
  10,852
  11,374
  11,923
  12,500
  13,107
EBITDA, $m
  521
  4,961
  5,075
  5,205
  5,352
  5,514
  5,692
  5,886
  6,096
  6,322
  6,565
  6,824
  7,101
  7,396
  7,709
  8,042
  8,394
  8,767
  9,162
  9,579
  10,019
  10,483
  10,973
  11,489
  12,033
  12,606
  13,209
  13,844
  14,512
  15,215
  15,954
Interest expense (income), $m
  326
  370
  419
  476
  542
  616
  698
  787
  885
  991
  1,105
  1,227
  1,358
  1,497
  1,646
  1,804
  1,972
  2,149
  2,337
  2,536
  2,746
  2,968
  3,202
  3,449
  3,709
  3,983
  4,272
  4,576
  4,896
  5,233
  5,587
Earnings before tax, $m
  -1,445
  3,101
  3,147
  3,196
  3,251
  3,310
  3,375
  3,444
  3,519
  3,599
  3,684
  4,379
  4,476
  4,579
  4,688
  4,803
  4,925
  5,054
  5,190
  5,333
  5,485
  5,645
  5,813
  5,990
  6,177
  6,373
  6,580
  6,798
  7,027
  7,267
  7,521
Tax expense, $m
  -482
  837
  850
  863
  878
  894
  911
  930
  950
  972
  995
  1,182
  1,209
  1,236
  1,266
  1,297
  1,330
  1,365
  1,401
  1,440
  1,481
  1,524
  1,569
  1,617
  1,668
  1,721
  1,777
  1,835
  1,897
  1,962
  2,031
Net income, $m
  -808
  2,264
  2,297
  2,333
  2,373
  2,417
  2,464
  2,514
  2,569
  2,627
  2,690
  3,197
  3,268
  3,343
  3,422
  3,506
  3,595
  3,689
  3,789
  3,893
  4,004
  4,121
  4,243
  4,373
  4,509
  4,653
  4,804
  4,962
  5,129
  5,305
  5,490

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  10,155
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  47,390
  37,967
  38,840
  39,838
  40,959
  42,201
  43,563
  45,047
  46,653
  48,383
  50,240
  52,226
  54,346
  56,603
  59,001
  61,546
  64,243
  67,098
  70,118
  73,308
  76,676
  80,230
  83,978
  87,929
  92,092
  96,476
  101,092
  105,951
  111,063
  116,442
  122,100
Adjusted assets (=assets-cash), $m
  37,235
  37,967
  38,840
  39,838
  40,959
  42,201
  43,563
  45,047
  46,653
  48,383
  50,240
  52,226
  54,346
  56,603
  59,001
  61,546
  64,243
  67,098
  70,118
  73,308
  76,676
  80,230
  83,978
  87,929
  92,092
  96,476
  101,092
  105,951
  111,063
  116,442
  122,100
Revenue / Adjusted assets
  0.670
  0.670
  0.670
  0.670
  0.670
  0.670
  0.670
  0.670
  0.670
  0.670
  0.670
  0.670
  0.670
  0.670
  0.670
  0.670
  0.670
  0.670
  0.670
  0.670
  0.670
  0.670
  0.670
  0.670
  0.670
  0.670
  0.670
  0.670
  0.670
  0.670
  0.670
Average production assets, $m
  4,346
  4,426
  4,528
  4,644
  4,775
  4,920
  5,079
  5,252
  5,439
  5,640
  5,857
  6,089
  6,336
  6,599
  6,878
  7,175
  7,489
  7,822
  8,174
  8,546
  8,939
  9,353
  9,790
  10,251
  10,736
  11,247
  11,785
  12,352
  12,948
  13,575
  14,234
Working capital, $m
  8,517
  -1,018
  -1,041
  -1,068
  -1,098
  -1,131
  -1,167
  -1,207
  -1,250
  -1,297
  -1,346
  -1,400
  -1,456
  -1,517
  -1,581
  -1,649
  -1,722
  -1,798
  -1,879
  -1,965
  -2,055
  -2,150
  -2,251
  -2,357
  -2,468
  -2,586
  -2,709
  -2,839
  -2,977
  -3,121
  -3,272
Total debt, $m
  4,499
  4,362
  4,961
  5,646
  6,415
  7,267
  8,201
  9,219
  10,321
  11,508
  12,781
  14,144
  15,598
  17,146
  18,792
  20,538
  22,388
  24,347
  26,418
  28,606
  30,917
  33,355
  35,926
  38,636
  41,492
  44,500
  47,666
  50,999
  54,507
  58,196
  62,078
Total liabilities, $m
  26,182
  26,045
  26,644
  27,329
  28,098
  28,950
  29,884
  30,902
  32,004
  33,191
  34,464
  35,827
  37,281
  38,829
  40,475
  42,221
  44,071
  46,030
  48,101
  50,289
  52,600
  55,038
  57,609
  60,319
  63,175
  66,183
  69,349
  72,682
  76,190
  79,879
  83,761
Total equity, $m
  21,208
  11,922
  12,196
  12,509
  12,861
  13,251
  13,679
  14,145
  14,649
  15,192
  15,775
  16,399
  17,065
  17,773
  18,526
  19,326
  20,172
  21,069
  22,017
  23,019
  24,076
  25,192
  26,369
  27,610
  28,917
  30,293
  31,743
  33,269
  34,874
  36,563
  38,339
Total liabilities and equity, $m
  47,390
  37,967
  38,840
  39,838
  40,959
  42,201
  43,563
  45,047
  46,653
  48,383
  50,239
  52,226
  54,346
  56,602
  59,001
  61,547
  64,243
  67,099
  70,118
  73,308
  76,676
  80,230
  83,978
  87,929
  92,092
  96,476
  101,092
  105,951
  111,064
  116,442
  122,100
Debt-to-equity ratio
  0.212
  0.370
  0.410
  0.450
  0.500
  0.550
  0.600
  0.650
  0.700
  0.760
  0.810
  0.860
  0.910
  0.960
  1.010
  1.060
  1.110
  1.160
  1.200
  1.240
  1.280
  1.320
  1.360
  1.400
  1.430
  1.470
  1.500
  1.530
  1.560
  1.590
  1.620
Adjusted equity ratio
  0.307
  0.314
  0.314
  0.314
  0.314
  0.314
  0.314
  0.314
  0.314
  0.314
  0.314
  0.314
  0.314
  0.314
  0.314
  0.314
  0.314
  0.314
  0.314
  0.314
  0.314
  0.314
  0.314
  0.314
  0.314
  0.314
  0.314
  0.314
  0.314
  0.314
  0.314

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -808
  2,264
  2,297
  2,333
  2,373
  2,417
  2,464
  2,514
  2,569
  2,627
  2,690
  3,197
  3,268
  3,343
  3,422
  3,506
  3,595
  3,689
  3,789
  3,893
  4,004
  4,121
  4,243
  4,373
  4,509
  4,653
  4,804
  4,962
  5,129
  5,305
  5,490
Depreciation, amort., depletion, $m
  1,682
  1,489
  1,510
  1,533
  1,559
  1,588
  1,620
  1,654
  1,692
  1,732
  1,775
  1,218
  1,267
  1,320
  1,376
  1,435
  1,498
  1,564
  1,635
  1,709
  1,788
  1,871
  1,958
  2,050
  2,147
  2,249
  2,357
  2,470
  2,590
  2,715
  2,847
Funds from operations, $m
  -4,263
  3,753
  3,807
  3,866
  3,932
  4,005
  4,083
  4,169
  4,261
  4,359
  4,465
  4,415
  4,535
  4,662
  4,798
  4,941
  5,093
  5,254
  5,423
  5,603
  5,792
  5,991
  6,202
  6,423
  6,656
  6,902
  7,161
  7,433
  7,719
  8,020
  8,337
Change in working capital, $m
  -2,728
  -20
  -23
  -27
  -30
  -33
  -37
  -40
  -43
  -46
  -50
  -53
  -57
  -60
  -64
  -68
  -72
  -77
  -81
  -85
  -90
  -95
  -100
  -106
  -112
  -117
  -124
  -130
  -137
  -144
  -152
Cash from operations, $m
  -1,535
  3,773
  3,830
  3,893
  3,962
  4,038
  4,120
  4,209
  4,304
  4,406
  4,515
  4,468
  4,592
  4,723
  4,862
  5,009
  5,165
  5,330
  5,504
  5,688
  5,882
  6,087
  6,302
  6,529
  6,768
  7,020
  7,284
  7,563
  7,856
  8,164
  8,488
Maintenance CAPEX, $m
  0
  -869
  -885
  -906
  -929
  -955
  -984
  -1,016
  -1,050
  -1,088
  -1,128
  -1,171
  -1,218
  -1,267
  -1,320
  -1,376
  -1,435
  -1,498
  -1,564
  -1,635
  -1,709
  -1,788
  -1,871
  -1,958
  -2,050
  -2,147
  -2,249
  -2,357
  -2,470
  -2,590
  -2,715
New CAPEX, $m
  -503
  -80
  -102
  -116
  -131
  -145
  -159
  -173
  -187
  -202
  -216
  -232
  -247
  -263
  -280
  -297
  -314
  -333
  -352
  -372
  -393
  -414
  -437
  -461
  -485
  -511
  -538
  -566
  -596
  -627
  -660
Cash from investing activities, $m
  7,215
  -949
  -987
  -1,022
  -1,060
  -1,100
  -1,143
  -1,189
  -1,237
  -1,290
  -1,344
  -1,403
  -1,465
  -1,530
  -1,600
  -1,673
  -1,749
  -1,831
  -1,916
  -2,007
  -2,102
  -2,202
  -2,308
  -2,419
  -2,535
  -2,658
  -2,787
  -2,923
  -3,066
  -3,217
  -3,375
Free cash flow, $m
  5,680
  2,824
  2,843
  2,871
  2,903
  2,938
  2,977
  3,020
  3,066
  3,116
  3,170
  3,065
  3,127
  3,193
  3,263
  3,337
  3,416
  3,499
  3,588
  3,681
  3,780
  3,884
  3,994
  4,110
  4,232
  4,361
  4,497
  4,639
  4,790
  4,948
  5,114
Issuance/(repayment) of debt, $m
  -2,611
  503
  599
  685
  769
  852
  935
  1,018
  1,102
  1,187
  1,274
  1,363
  1,454
  1,548
  1,645
  1,746
  1,850
  1,959
  2,071
  2,188
  2,311
  2,438
  2,571
  2,710
  2,856
  3,008
  3,167
  3,333
  3,507
  3,690
  3,881
Issuance/(repurchase) of shares, $m
  -222
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -3,597
  503
  599
  685
  769
  852
  935
  1,018
  1,102
  1,187
  1,274
  1,363
  1,454
  1,548
  1,645
  1,746
  1,850
  1,959
  2,071
  2,188
  2,311
  2,438
  2,571
  2,710
  2,856
  3,008
  3,167
  3,333
  3,507
  3,690
  3,881
Total cash flow (excl. dividends), $m
  2,129
  3,327
  3,442
  3,556
  3,671
  3,790
  3,912
  4,038
  4,168
  4,303
  4,444
  4,428
  4,581
  4,741
  4,908
  5,083
  5,266
  5,458
  5,659
  5,870
  6,091
  6,323
  6,566
  6,821
  7,088
  7,369
  7,663
  7,973
  8,297
  8,638
  8,995
Retained Cash Flow (-), $m
  -10,123
  -229
  -274
  -313
  -352
  -390
  -428
  -466
  -504
  -543
  -583
  -624
  -666
  -709
  -753
  -799
  -847
  -896
  -948
  -1,002
  -1,058
  -1,116
  -1,177
  -1,241
  -1,307
  -1,377
  -1,449
  -1,526
  -1,605
  -1,689
  -1,776
Prev. year cash balance distribution, $m
 
  9,515
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  12,613
  3,168
  3,242
  3,320
  3,400
  3,484
  3,572
  3,664
  3,760
  3,861
  3,804
  3,915
  4,032
  4,155
  4,284
  4,419
  4,562
  4,711
  4,868
  5,033
  5,207
  5,389
  5,580
  5,781
  5,992
  6,214
  6,447
  6,692
  6,949
  7,219
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  12,093
  2,900
  2,822
  2,733
  2,635
  2,528
  2,413
  2,290
  2,160
  2,024
  1,806
  1,671
  1,533
  1,395
  1,258
  1,123
  993
  868
  750
  640
  539
  447
  366
  294
  233
  181
  138
  104
  76
  54
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Nokia Oyj is a Finland-based company engaged in the network and Internet protocol (IP) infrastructure, software, and related services market. The Company's businesses include Nokia Networks and Nokia Technologies. The Company's segments include Ultra Broadband Networks, IP Networks and Applications, and Nokia Technologies. The Ultra Broadband Networks segment comprises Mobile Networks and Fixed Networks operating segments. The IP Networks and Applications segment comprises IP/Optical Networks and Applications & Analytics operating segments. The Applications & Analytics operating segment offers software solutions spanning customer experience management, network operations and management, communications and collaboration, policy and charging, as well as Cloud, Internet of things (IoT), security, and analytics platforms that enable digital services providers and enterprises to accelerate and optimize their customer experience. The Company has Comptel Oyj among its subsidiaries.

FINANCIAL RATIOS  of  Nokia ADR (NOK)

Valuation Ratios
P/E Ratio -33.1
Price to Sales 1.1
Price to Book 1.3
Price to Tangible Book
Price to Cash Flow -17.4
Price to Free Cash Flow -13.1
Growth Rates
Sales Growth Rate 89%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 52%
Cap. Spend. - 3 Yr. Gr. Rate 3.2%
Financial Strength
Quick Ratio 16
Current Ratio 0
LT Debt to Equity 18.2%
Total Debt to Equity 21.2%
Interest Coverage -3
Management Effectiveness
Return On Assets -1.7%
Ret/ On Assets - 3 Yr. Avg. 9.8%
Return On Total Capital -4.1%
Ret/ On T. Cap. - 3 Yr. Avg. 14.8%
Return On Equity -5%
Return On Equity - 3 Yr. Avg. 22.2%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 35.9%
Gross Margin - 3 Yr. Avg. 40.9%
EBITDA Margin 2.3%
EBITDA Margin - 3 Yr. Avg. 10.6%
Operating Margin -4.7%
Oper. Margin - 3 Yr. Avg. 7%
Pre-Tax Margin -5.8%
Pre-Tax Margin - 3 Yr. Avg. 5%
Net Profit Margin -3.2%
Net Profit Margin - 3 Yr. Avg. 15.3%
Effective Tax Rate 33.4%
Eff/ Tax Rate - 3 Yr. Avg. -38.8%
Payout Ratio -197.9%

NOK stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NOK stock intrinsic value calculation we used $24939 million for the last fiscal year's total revenue generated by Nokia ADR. The default revenue input number comes from 2016 income statement of Nokia ADR. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our NOK stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for NOK is calculated based on our internal credit rating of Nokia ADR, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Nokia ADR.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of NOK stock the variable cost ratio is equal to 86.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for NOK stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 9.6% for Nokia ADR.

Corporate tax rate of 27% is the nominal tax rate for Nokia ADR. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the NOK stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for NOK are equal to 17.4%.

Life of production assets of 4.5 years is the average useful life of capital assets used in Nokia ADR operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for NOK is equal to -4%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $21208 million for Nokia ADR - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 5873.35 million for Nokia ADR is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Nokia ADR at the current share price and the inputted number of shares is $27.5 billion.

RELATED COMPANIES Price Int.Val. Rating
ERIC Ericsson ADR 6.64 6.27  hold
MSFT Microsoft 85.35 60.77  sell
TI Telecom Italia 7.24 21.72  str.buy
DCM NTT DoCoMo ADR 25.51 11.27  str.sell
VOD Vodafone Group 31.34 17.24  sell
KT KT ADR 15.45 37.13  str.buy

COMPANY NEWS

▶ ETFs with exposure to Nokia Oyj : December 14, 2017   [Dec-14-17 01:58PM  Capital Cube]
▶ Nokia Stock Is Down, but Worth Considering   [Dec-12-17 11:12AM  Motley Fool]
▶ Nokia COO to leave the company   [02:45AM  Reuters]
▶ Why Is Nokia Getting $137 Million from Blackberry?   [Dec-08-17 07:31AM  Market Realist]
▶ Inside Nokias View of Digital Health after the Write-Down   [Dec-07-17 10:31AM  Market Realist]
▶ Inside the Nokia-Juniper Deal: Junipers Perspective   [Dec-06-17 02:50PM  Market Realist]
▶ The Biggest Loser: Juniper Networks Short Circuits   [Nov-30-17 05:00PM  Barrons.com]
▶ Juniper Networks stock soars on report of Nokia buyout talks   [11:50AM  American City Business Journals]
▶ Nokia denies Juniper acquisition interest   [07:34PM  MarketWatch]
▶ Juniper Networks Stock Jumps On Nokia Takeover Buzz   [05:28PM  Investor's Business Daily]
▶ Apple Seeks Patent for a Foldable Phone   [07:04AM  Investopedia]
▶ ETFs with exposure to Nokia Oyj : November 27, 2017   [Nov-27-17 03:03PM  Capital Cube]
▶ StarHub to develop IoT applications with Nokia   [04:02AM  Singapore Business Review]
▶ 5 More Reasons You Should Break Up With an Investment   [Nov-20-17 09:20PM  Motley Fool]
▶ ETFs with exposure to Nokia Oyj : November 13, 2017   [Nov-13-17 12:53PM  Capital Cube]
▶ Amazon's Next Big Target: The Telecom Industry?   [Nov-09-17 10:08PM  Motley Fool]
▶ How Nokia Technologies Impacted NOKs Top Line   [09:01AM  Market Realist]
▶ Why Nokia Networks Isnt All Bad News   [Nov-08-17 03:40PM  Market Realist]
▶ Company Update: Nokia Oyj (ADR) (NOK) Signs MoU with Vodacom   [Nov-07-17 09:55AM  SmarterAnalyst]
▶ The iPhone X Is the Beginning of the End for Apple   [Nov-02-17 11:12AM  Fortune]
▶ A Nokia Success Story. Yes, Really   [04:00AM  Bloomberg]
▶ ETFs with exposure to Nokia Oyj : November 1, 2017   [Nov-01-17 12:28PM  Capital Cube]
▶ Nokia Shares Are A Buy, Just Not Right Now   [Oct-30-17 03:15PM  Benzinga]
▶ Nokia's Outlook Worsens As Revenue Slumps   [Oct-27-17 06:45PM  Motley Fool]
▶ Behind the NokiaBosch Deal   [10:32AM  Market Realist]
▶ Why Nokia Is Cutting Jobs in France   [09:00AM  Market Realist]
▶ Why Nokia Is Hiring for R&D in France   [07:34AM  Market Realist]
▶ [$$] Nokia Shares Plunge on Downbeat Outlook   [Oct-26-17 08:52PM  The Wall Street Journal]
▶ [$$] Nokia Shares Plunge on Downbeat Outlook   [06:05PM  The Wall Street Journal]
▶ [$$] Nokia: all snakes, no ladders   [11:21AM  Financial Times]
▶ Who Wins in Nokias Exit from VR?   [09:08AM  Market Realist]
Financial statements of NOK
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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