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Is BlackBerry (BBRY) Poised to Beat Earnings Estimates?

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Canadian smartphone manufacturer BlackBerry Limited is set to release its third-quarter fiscal 2014 results before the opening bell on Dec 20, 2013.

In the last quarter, the company delivered a 6% 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 recently launched devices failed to produce significant demand.

However, a major growth product for BlackBerry is its BlackBerry Enterprise Service 10 (BES10) solution which is being used by more than 18,000 enterprises. This flexible, scalable, high security and cost-effective cross-platform product is interoperable with Apple’s iOS and Google’s Android. Furthermore, availability of BBM messenger on iOS and Android platform coupled with the launch of BBM Channels will continue to boost the social networking business. Moreover, a strong cash position and a debt-free balance sheet will tend to act as tailwinds for the company going forward.

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.

Zero Zacks ESP: This is because both the Most Accurate estimate and the Zacks Consensus Estimate are poised at 46 cents. This leads to an ESP of 0.00% 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 0.00% 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.

T-Mobile US, Inc. (TMUS - Free Report) has Earnings ESP of +46.67% and carries a Zacks Rank #3 (Hold).

Nokia Corporation (NOK - Free Report) has Earnings ESP of +33.33% and carries a Zacks Rank #3 (Hold).

Qualcomm Inc. (QCOM - Free Report) has Earnings ESP of +3.67% and carries a Zacks Rank #2 (Buy).


In-Depth Zacks Research for the Tickers Above

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T-Mobile US, Inc. (TMUS) - free report >>

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