BlackBerry (BB) To Report Q3 Earnings: What's In The Cards?

BlackBerry Limited (NYSE:BB) is scheduled to report third-quarter fiscal 2020 results (ended Nov 30, 2019) on Dec 20, before the opening bell. In the last reported quarter, the company delivered a negative earnings surprise of 100%. BlackBerry topped the Zacks Consensus Estimate for earnings twice in the trailing four quarters. The last four-quarter positive surprise is 31.3%, on average.

Going forward, increased investments in sales and product development are likely to support its growth while the positive reception of BlackBerry Intelligent Security acts as a tailwind. The cybersecurity software and services company has been investing in the right opportunities to drive long-term growth and profitability.

Factors at Play

BlackBerry is integrating its endpoint management and AI technologies on one platform to address the high-growth endpoint security market. During the fiscal third quarter, it launched the latest version of its automotive acoustics software, QNX Acoustics Management Platform 3.0. Automotive original equipment manufacturers are using BlackBerry QNX technology in their driver assistance systems, digital instrument clusters, connectivity modules, handsfree systems, and infotainment systems that can be seen in prominent car brands. The momentum is likely to have benefited BlackBerry’s performance in the quarter under review.

Further, the company created Advanced Technology Development Labs (BlackBerry Labs). This is a new business unit operating at the forefront of R&D in the cybersecurity landscape. BlackBerry aims to ensure that its customers are protected across all endpoints and verticals in the IoT. Headed by chief technology officer, BlackBerry Labs’ initial projects will focus on machine learning approaches to security in partnership with the company’s existing Cylance, Enterprise and QNX business units.

However, weak demand for its software from companies and government agencies amid increasing competition remains worrisome. As BlackBerry expands service portfolios, a decisive challenge persists as rivals tend to offer services at lower margin and disruptive prices in key segments. The company might not be able to tide over the broader challenges in the near future.

For the to-be-reported quarter, the Zacks Consensus Estimate for adjusted earnings per share is pegged at 1 cent, indicating a decline from 3 cents reported a year ago.

What Our Model Says

Our proven model does not conclusively predict an earnings beat for BlackBerry this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here as you’ll see below:

Earnings ESP: BlackBerry’s Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00% as both are pegged at 1 cent. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

BlackBerry Limited Price and EPS Surprise

Zacks Rank: BlackBerry currently carries a Zacks Rank #3.

Stocks to Consider

Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:

NIKE, Inc. (NYSE:NKE) is slated to release quarterly results on Dec 19. It has an Earnings ESP of +2.69% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Winnebago Industries, Inc. (NYSE:WGO) is scheduled to release results on Dec 20. The company has an Earnings ESP of +11.70% and carries a Zacks Rank #3.

CarMax, Inc. (NYSE:KMX) has an Earnings ESP of +0.21% and carries a Zacks Rank of 3. The company is set to report results on Dec 20.

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