Critical Analysis: NTT Docomo (DCM) versus Nokia Oyj (NOK)

NTT Docomo (NYSE:DCM) and Nokia Oyj (NYSE:NOK) are both large-cap computer and technology companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, analyst recommendations, valuation, profitability, institutional ownership, risk and earnings.

Volatility & Risk

NTT Docomo has a beta of 0.1, suggesting that its share price is 90% less volatile than the S&P 500. Comparatively, Nokia Oyj has a beta of 1.15, suggesting that its share price is 15% more volatile than the S&P 500.

Dividends

NTT Docomo pays an annual dividend of $0.39 per share and has a dividend yield of 1.5%. Nokia Oyj pays an annual dividend of $0.20 per share and has a dividend yield of 3.5%. NTT Docomo pays out 24.1% of its earnings in the form of a dividend. Nokia Oyj pays out 54.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. NTT Docomo has raised its dividend for 2 consecutive years.

Valuation & Earnings

This table compares NTT Docomo and Nokia Oyj’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
NTT Docomo $42.41 billion 2.24 $6.07 billion $1.62 15.80
Nokia Oyj $26.15 billion 1.23 -$1.69 billion $0.37 15.38

NTT Docomo has higher revenue and earnings than Nokia Oyj. Nokia Oyj is trading at a lower price-to-earnings ratio than NTT Docomo, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares NTT Docomo and Nokia Oyj’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
NTT Docomo 15.25% 12.38% 9.34%
Nokia Oyj -4.56% 9.10% 3.64%

Analyst Recommendations

This is a breakdown of current ratings for NTT Docomo and Nokia Oyj, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NTT Docomo 1 2 0 0 1.67
Nokia Oyj 3 5 6 0 2.21

Nokia Oyj has a consensus target price of $5.72, indicating a potential upside of 0.50%. Given Nokia Oyj’s stronger consensus rating and higher probable upside, analysts clearly believe Nokia Oyj is more favorable than NTT Docomo.

Insider and Institutional Ownership

0.6% of NTT Docomo shares are owned by institutional investors. Comparatively, 6.8% of Nokia Oyj shares are owned by institutional investors. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Summary

NTT Docomo beats Nokia Oyj on 10 of the 16 factors compared between the two stocks.

NTT Docomo Company Profile

NTT DOCOMO, INC. (DOCOMO) is a mobile telecommunications carrier. The Company operates through three segments: telecommunications business, smart life business and other businesses. The telecommunications business segment includes mobile phone services (long-term evolution (LTE) (Xi) services and freedom of mobile multimedia access (FOMA) services), optical-fiber broadband service, satellite mobile communications services, international services and equipment sales related to these services. The smart life business segment includes video and music distribution, electronic books and other services offered through its dmarket portal, as well as finance/payment services, shopping services and various other services to support the Company’s customers’ daily lives. Its other businesses segment primarily includes Mobile Device Protection Service, as well as the development, sale and maintenance of information technology (IT) systems.

Nokia Oyj Company Profile

Nokia Corporation engages in the network and technology businesses worldwide. The company operates through four segments: Ultra Broadband Networks, Global Services, IP Networks and Applications, and Nokia Technologies. It provides mobile networking solutions, including hardware, software, and services for telecommunications operators, enterprises, and related markets/verticals. It also offers fixed networking solutions, such as copper based solutions; fiber-to-the-home solutions, including Ethernet point-to-point, gigabit passive optical networks, EPON, and 10 gigabit next generation fiber technologies; fiber access products, solutions, and services; and public switched telephone network transformation, ultra-broadband network design, deployment and operation, site implementation and outside plant, and multi-vendor maintenance services. In addition, the company provides network implementation, care, and professional services for mobile networks; and managed services, such as network and service management, build-operate-transfer model, hosting, analytics, Internet of Things (IoT), cloud, and security operation services for the fixed, mobile, applications, Internet protocol (IP), and optical domains. Further, it offers network planning and optimization services to enhance the network performance and quality, and analytics-based services; and network architecture, integration, customization, and migration services. Additionally, the company provides IP/optical networking solutions, including IP routing and optical transport systems, software, and services; software solutions, such as customer experience management, network operations and management, communications and collaborations, policy and charging, as well as Cloud, IoT, security, and analytics platforms; and submarine networks and radio frequency systems. Nokia Corporation has a collaboration agreement with Filtronic. The company was founded in 1865 and is headquartered in Espoo, Finland.

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