Nokia Corp (ADR) (NYSE:NOK) has gotten some media coverage lately, amidst the return of the Nokia phone via a licensing deal, the patent war with Apple Inc. (NASDAQ:AAPL), and now the purchase of Comptel, a Finnish telecom software company.

However, Nokia stock hasn’t been doing well over the past few years. NOK opened on Jan. 1, 2011 at $10.58 a share and now is trading at about $5. Last year, Nokia stock fell 45%. Over the past 10 years, Nokia stock is down 77%, while the S&P 500 rose 62% during the same period.

At first glance, Nokia stock doesn’t look too good. A weak global economy will depress capex, including investment in telecom infrastructure, over the near term. Spending on 4G equipment peaked last year in many markets, while 5G remains a few years off.

But contrarians might find Nokia stock interesting. Telecom, after all, is a very cyclical industry. Telecoms tend to overinvest, like in 1999-2001, and then spend little for a few years. Eventually, investment recovers as telcos begin to install the next-generation mobile technology. This cycle repeats itself every few years.

Let’s look at the bright spots for Nokia.

Nokia’s Performance in Emerging Markets

Nokia performed well last year in China and India, two major markets expected to increase in importance in the future.

Nokia’s performance in China stands out as impressive, given the presence of two local competitors, Huawei and ZTE. Last year, Nokia inked a $1.5 billion deal with China Mobile Ltd. (ADR) (NYSE:CHL), the world’s largest mobile phone operator, to provide the latter with cloud services and technology. In August, Nokia agreed to supply China Telecom Corporation Limited (ADR) (NYSE:CHA), China’s largest landline telecom and third-largest mobile network, with 4G technology.

The consulting firm Analysys Mason expects the telecom equipment market in India to grow 10% to 12% annually over the next few years. With 120 deals in Indian telecoms in 2016, Nokia claims to India’s No. 1 telecom infrastructure vendor. Nokia does business with the three biggest telcos in India: Bharti Airtel, Vodafone Group Plc (ADR) (NASDAQ:VOD) and Idea Cellular. All trust Nokia to help them roll out 4G technology in the country. The importance of India may increase as investment slows in other markets. Even in China, 4G is now maturing, and Fitch sees capex declining 10% for Chinese telecoms in 2017.

Nokia: Diversifying its Business

Nokia broadened its portfolio over the past few years with a string of acquisitions. This reduces risk for Nokia and gives NOK an advantage over its competitors such as Ericsson (NASDAQ:ERIC). Last year, Nokia completed its merger with Alcatel-Lucent, strengthening its position in mobile networks. The deal also makes Nokia a player in fixed networks as well as routers and switches. Now, Nokia is No. 1 in mobile, No. 2 in fixed and No. 2 in switching and routing.

Nokia also bought Gainspeed last year, the leader in Distributed Access Architectures (DAA) for cable networks. According to BusinessWire,

“Gainspeed’s Virtual CCAP solution is the industry’s first and only available DAA.”

Cable networks are in a rush to increase their capacity, and Gainspeed, now part of Nokia, enables them to meet these demands by virtualizing the network. Nokia’s solution reduces the need for equipment and allows savings in rackspace and power consumption.

Nokia’s competitors, such as Cisco Systems, Inc. (NASDAQ:CSCO) may regret not buying Gainspeed and its cutting-edge technology. Virtualization threatens Cisco’s CCAP hardware.

Recently, Nokia announced the purchase of Comptel, a maker of software used by over 300 carriers. This will strengthen Nokia’s position in software and analytics and help it benefit from the commoditization of networking hardware. Buying Comptel also adds a high-gross-margin business to Nokia.

Despite the focus on expensive hardware and software for carriers, Nokia remains interested in consumer products. Last year, NOK bought Withings, a French maker of wearable devices such as smartwatches and fitness trackers. Withings also produces blood pressure monitors and a thermometers, both approved by the FDA.

Nokia’s Valuation/Financials

Nokia operated at a loss in 2016, so ratios such as price/earnings and EV/EBITDA won’t tell us much. However, Nokia looks cheap on other measures, such as price/book and price/sales.

Nokia’s book value per share has grown 15% annually from 2013 to 2016 in dollar terms. In constant currency, the increase in book value looks even more impressive, since the rising dollar masks much of the gain. Nokia increased its book value at a 25% annual rate in constant currency. And these gains cannot be attributed to goodwill; Nokia’s goodwill/assets ratio is slightly down, from 0.13 in 2013 to 0.12 now.

Nokia’s price/sales ratio fell from 1.83 in 2013 to 1.11 now, and the price/book ratio fell from 3.34 in 2013 to 1.31 now. Expectations have fallen, which means lower downside risk.

Nokia has also deleveraged, with debt-equity down from 1.03 in 2013 to 0.21 now.

And Nokia boasts a fat dividend, which at 29 cents per share yields 5.93%. Although Nokia lost 13 cents per share in 2016, it earned 11 cents a share in the most recent quarter, which may reduce the risk of a dividend cut.

As of writing, Lucas Hahn did not hold a position in any of the aforementioned securities.