What's in the Offing for BlackBerry (BB) in Q3 Earnings?

BlackBerry Limited BB is slated to release third-quarter fiscal 2018 results on Dec 20, before the market opens.

Last quarter, the company reported earnings of 5 cents per share compared favorably with the Zacks Consensus Estimate of a loss of a penny. Results were aided by robust software sales. Total revenues in the quarter were $249 million, down 25.4% year over year. However, the top line surpassed the Zacks Consensus Estimate of $231 million.

Lets see whats in store this earnings season.

Factors Likely at Play

We expect BlackBerry’s fiscal third-quarter results to be benefited by strong software sales on the back of its decision to end all internal hardware development and focus exclusively on software business.

Of late, the company has also inked many deals to bolster its software business. For example, during the quarter BlackBerry signed a sales and distribution agreement with Tokyo Electron Device Limited. Per the agreement, Japanese device manufacturers will have access to Blackberry's QNX Software Development Platform 7.0, the most advanced and secure embedded platform in the market.

In fact, BlackBerry’s efforts to expand its product portfolio augur well and should boost results in the to-be-reported quarter. The company expects its Software and Service revenues to rise between 10% and 15% for fiscal 2018.

During the quarter, BlackBerry was ordered to pay Nokia NOK approximately $137 million following the loss of a payment dispute with the latter. We expect management to provide an update on the issue on the fiscal third-quarter conference call.

However, BlackBerry is exposed to risks related to foreign currency fluctuations as it operates globally. Adverse foreign currency effects might also hurt results in the to-be-reported quarter. High costs might hurt the bottom line as well.

BlackBerry Limited Price and EPS Surprise

 

BlackBerry Limited Price and EPS Surprise | BlackBerry Limited Quote

Earnings Whispers

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

Zacks ESP: BlackBerry has an Earnings ESP of 0.00%. This is because the Most Accurate estimate is in line with the Zacks Consensus Estimate of a loss of a penny. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: BlackBerry has a Zacks Rank #3, which increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.

We caution against Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Investors interested in the broader Computer and technology sector may consider the following stocks with the right combination of elements to deliver an earnings beat in their upcoming releases:

Salesforce.com CRM has an Earnings ESP of +0.02% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

PayPal Holdings PYPL has an Earnings ESP of +0.86% and a Zacks Rank #3.

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