Don’t Count Nokia Corporation (ADR) (NOK) Out Yet

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Undervalued stock

What really helps Nokia shareholders breathe a sigh of relief is that the company is extremely undervalued. Nokia has an extremely valuable patent portfolio. Of the $37 billion in revenue last year, roughly $600 million came from patent royalties. At 10 times revenue, the patent portfolio could be worth as much as $6 billion.

The current stock price doesn’t reflect the excellent balance sheet position with a net $6.2 billion more cash than debt. The market also doesn’t take into account Nokia’s stake in Nokia Corporation (ADR) (NYSE:NOK) Siemens. When you add all of this up, the value of its parts is greater than its current market cap of just over $13 billion.

Foolish assessment

The smartphone market is an extremely competitive marketplace. Nokia is battling with the likes of Apple Inc. (NASDAQ:AAPL), BlackBerry, and Google Inc (NASDAQ:GOOG)’s Android smartphones. Each company is looking to capture an ever-changing market. Nokia Corporation (ADR) (NYSE:NOK) once dominated the mobile-phone market and today it is locked in a battle as the company missed the changing market.

In comparing Nokia with its competitors we see:

Nokia BlackBerry Apple Google
Market Cap $13.8B $7.5B $406.7B $301.6B
Revenue $37.1B $11.1B $169.1B $53.5B
EBITDA $1.4B $1.2B $57.4B $16.8B
Net Income -$3.2B -$628.00M $39.7B $11.2B
Gross Margin 0.3 0.3 0.4 0.6
Price/Sales 0.4 0.7 2.4 5.6

Apple Inc. (NASDAQ:AAPL) and Google Inc (NASDAQ:GOOG) are more fully valued than Nokia Corporation (ADR) (NYSE:NOK) or BlackBerry. BlackBerry and Nokia are both turnaround situations. Nokia is continuing to make the right moves for the long-run and shareholders, unfortunately, must remain patient. At a current price of under $4 per share, the upside looks greater than the downside for Nokia shares.

The article Don’t Count Nokia Out Yet originally appeared on Fool.com.

Mark is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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