With shares of BlackBerry (NASDAQ:BBRY) trading around $9, is BBRY an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:
T = Trends for a Stock’s MovementBlackBerry is a designer, manufacturer, and marketer of wireless solutions for the worldwide mobile communications market. Through the development of integrated hardware, software, and services, it provides platforms and solutions for seamless access to information, including email, voice, instant messaging, SMS, Internet, and intranet-based applications and browsing. Its products and services include the BlackBerry wireless solution, the Research In Motion Wireless Handheld product line, the BlackBerry PlayBook tablet, software development tools, and other software and hardware.
BlackBerry’s portfolio of products, services, and embedded technologies are used by thousands of organizations and millions of consumers around the world. Several economies around the world are growing and adopting these technologies into their daily lives. The company has also recently rebranded, which may offer a boost to their bottom line. However, a recent negative earnings report has the stock hurting.
T = Technicals on the Stock Chart are WeakBlackBerry stock has not done very well over the last few years as it struggles against key competition. Recently, the stock has broken-down after a negative earnings announcement. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, BlackBerry is trading below its key averages which signal neutral to bearish price action in the near-term.
(Source: Thinkorswim)
Taking a look at the implied volatility (red) and implied volatility skew levels of BlackBerry options may help determine if investors are bullish, neutral, or bearish.
| Implied Volatility (IV) | 30-Day IV Percentile | 90-Day IV Percentile | |
| BlackBerry Options | 65.13% | 26% | 23% |
What does this mean? This means that investors or traders are buying a minimal amount of call and put options contracts, as compared to the last 30 and 90 trading days.
| Put IV Skew | Call IV Skew | |
| July Options | Steep | Average |
| August Options | Steep | Average |
As of today, there is an average demand from call buyers or sellers and high demand by put buyers or low demand by put sellers, all neutral to bearish over the next two months. To summarize, investors are buying a minimal amount of call and put option contracts and are leaning neutral to bearish over the next two months.
On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.
E = Earnings Are Decreasing Quarter-Over-QuarterRising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on BlackBerry’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for BlackBerry look like and more importantly, how did the markets like these numbers?
| 2013 Q1 | 2012 Q4 | 2012 Q3 | 2012 Q2 | |
| Earnings Growth (Y-O-Y) | 86.87% | -78.23% | -96.08% | -171.43% |
| Revenue Growth (Y-O-Y) | 9.13% | -41.26% | -47.21% | -31.07% |
| Earnings Reaction | -25.20% | -0.89% | -22.73% | 5.04% |
BlackBerry has seen decreasing earnings and revenue figures over most of the last four quarters. From these numbers, the markets have been disappointed with BlackBerry’s recent earnings announcements.
P = Poor Relative Performance Versus Peers and SectorHow has BlackBerry stock done relative to its peers, Apple (NASDAQ:AAPL), Google (NASDAQ:GOOG), Nokia (NYSE:NOK), and sector?
| BlackBerry | Apple | | Nokia | Sector | |
| Year-to-Date Return | -18.87% | -20.83% | 25.31% | -1.27% | 4.62% |
BlackBerry has been a poor relative performer, year-to-date.
ConclusionBlackBerry is attempting to change the wireless communications industry with its rebranded company and products. After a negative earnings announcement, the stock has broken down and seems to be heading lower. Over most of the last four quarters, earnings and revenue figures have declined which has really disappointed investors in the company. Relative to its peers and sector, BlackBerry has been a poor year-to-date performer. WAIT AND SEE what BlackBerry does in future quarters.
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