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Is a Surprise in Store for BlackBerry (BBRY) in Q2 Earnings?

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BlackBerry Limited is scheduled to report second-quarter fiscal 2017 operating results on Sep 28, 2016, before the market opens.

In the fiscal first quarter, the company posted narrower-than-expected loss per share. It also reported positive surprises in three of the last four quarters. With the shift in the company’s business from hardware to software products, it remains to be seen how it has performed this time around.

Our proven model does not conclusively show that BlackBerry is likely to beat earnings 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, that is not the case here as elaborated below.

Zacks ESP: BlackBerry has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of 10 cents.

Zacks Rank: BlackBerry carries a Zacks Rank #3, which increases the predictive power of ESP. However, a 0.00% ESP makes surprise prediction difficult.

Note that stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.

BLACKBERRY LTD Price and EPS Surprise



Factors Likely to Influence this Quarter

BlackBerry’s revenues remain under pressure due to below-par sales of its struggling hardware products. As a result, the company is shifting its focus to software services as a major source of revenues. To this end, it has inked many strategic deals. The latest of these is the partnership with Zimperium Inc. – a well known as a provider of mobile threat detection platforms – to enhance mobile security for enterprise and government customers.

Moreover, BlackBerry inked a deal with PT Elang Mahkota Teknologi Tbk. (“Emtek”) of Indonesia during the quarter. The deal pertains to provision of market-leading services to BBM cross-platform customers. Emtek is Indonesia’s largest entertainment business with media, entertainment and technology services. This deal is part of BlackBerry’s strategy of targeting future growth through software, licensing and IP enhancements. BlackBerry has increased investments in the Enterprise Mobility Management space. We expect an update on the same at the fiscal second-quarter conference call.

As part of its shift, BlackBerry announced its decision to discontinue the production of the BlackBerry Classic smartphone. The decision is not surprising as Apple Inc.’s (AAPL - Free Report) iPhone and Alphabet Inc.’s (GOOGL - Free Report) Android-powered touchscreen smartphones have gained immense popularity among consumers in recent years. Investors will also keenly await a commentary on this business move.

A Stock to Consider

Asure Software Inc. (ASUR - Free Report) is a stock in the broader computer & technology sector that is likely to beat the Zacks Consensus Estimate at its next earnings release. The company has an Earnings ESP of +14.29% and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here. The  Zacks Consensus Estimate for 2016 has increased 26.7% to $0.19 per share over the last 30 days.

See our video article on BlackBerry’s expected Q2 earnings here

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