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Is BlackBerry (BBRY) Poised to Beat Earnings?

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Canadian smartphone manufacturer, BlackBerry Limited is set to release its second-quarter fiscal 2014 results before the opening bell on Sep 27, 2013.

In the last quarter, the company delivered a 425% negative earnings surprise. Let’s see how things are shaping up for this announcement.

Factors to be Considered This Quarter

BlackBerry continues to struggle as the company’s newly launched operating platform BB10 failed to attract buyers. Moreover, its newly launched devices produced lackluster performance.

Few days back, BlackBerry reported dismal preliminary results for its second quarter of fiscal 2014 where it reported sales of only 3.7 million handsets. Moreover, the company will incur an inventory charge of nearly $960 million, mainly associated with the cost of unsold devices.

Meanwhile, BlackBerry has decided to go private by divesting its entire stake to a consortium headed by Toronto-based insurance company Fairfax Financial Holdings Limited for $4.7 billion or $9 per share. Moreover, the company has also decided to offer its popular BBM service to Android and iPhone users.

Earnings Whispers

Our proven model does not conclusively show that BlackBerry 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 #3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below.

Negative Zacks ESP: This is because the Most Accurate Estimate is a loss of 50 cents while the Zacks Consensus Estimate is lower at a loss of 46 cents. This leads to an ESP of -8.70% for BlackBerry.

Zacks Rank #3 (Hold): BlackBerry’s Zacks Rank #3, decreases the predictive power of ESP.

We caution investors against the stock going into the earnings announcement, as a Zacks Earnings ESP of -8.70% combined with a Zacks Rank # 3 lowers the possibility of an earnings surprise.

Other Stocks to Consider

Here are some other companies to consider as our model shows they have the right combination of elements to post an earnings beat this quarter.

Apple Inc. (AAPL - Free Report) has Earnings ESP of +1.42% and carries a Zacks Rank #3 (Hold).

America Movil (AMX - Free Report) has Earnings ESP of +20.00% and carries a Zacks Rank #3 (Hold).

Comcast Corp. (CMCSA - Free Report) has Earnings ESP of +5.00% and carries a Zacks Rank #3 (Hold).

In-Depth Zacks Research for the Tickers Above

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Apple Inc. (AAPL) - free report >>

America Movil, S.A.B. de C.V. (AMX) - free report >>

Comcast Corporation (CMCSA) - free report >>

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