BlackBerry: What To Expect In Q1 Earnings Release?

We expect Canadian handset manufacturer BlackBerry Limited BBRY to beat expectations when it reports first-quarter 2016 financial results before the market opens on Jun 23, 2016.

In the last quarter, the company delivered a 233.33% earnings surprise. Let’s see how things are shaping up for this announcement.

Why a Likely Positive Surprise?

Our proven model shows that BlackBerry is likely to beat earnings because it has the right combination of two key ingredients.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at +166.67%. This is because the Most Accurate estimate stands at earnings of 2 cents, whereas the Zacks Consensus Estimate is pegged at a loss of 3 cents. This serves as a meaningful and leading indicator of a likely positive earnings surprise.  

Zacks Rank: BlackBerry currently has a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1, #2 or #3 have a significantly higher chance of beating earnings. Conversely, the Sell-rated stocks (Zacks Rank #4 and 5) should never be considered going into an earnings announcement.

The combination of BlackBerry’s Zacks Rank #3 and +166.67% ESP makes us reasonably confident of an earnings beat.

What is Driving the Better-Than-Expected Earnings?

Lately, BlackBerry has been exploring several alternate business options which should help the company offset escalating losses in its smartphone business. Also, BlackBerry’s BES12 platform is increasingly gaining traction among enterprise customers. Furthermore, the company’s cost-cutting initiatives coupled with a strong cash position have encouraged the company to acquire few businesses over the last one year.

However, lack of a new product launch, decline in smartphone sales, mounting debts, stiff competition from leading handset makers and enterprise security management companies will continue to act as headwinds for BlackBerry while moving ahead.  

Other Stocks to Consider

Here are some companies you may want to consider as our model shows these have the right combination of elements to post an earnings beat this quarter.

InterDigital, Inc. IDCC with an Earnings ESP of +28.4% and a Zacks Rank #1 (Strong Buy).

Gogo Inc. GOGO with an Earnings ESP of +6.45% and a Zacks Rank #3.

T-Mobile US, Inc. TMUS with an Earnings ESP of +9.52% and a Zacks Rank #3.