Wednesday, August 16, 2017

BlackBerry Ltd

Sound bite for Twitter and StockTwits is: Damaged tech stock. Mostly the stock price testing shows a reasonable price unless you look at P/S Ratio. Unfortunately, when a stock is not earning any money, Revenue becomes more important. The problem with BlackBerry is that revenue is still falling. Perhaps a better time to buy is when we can see that Revenue may start to increase. See my spreadsheet on BlackBerry Ltd.

I do not own this stock of BlackBerry Ltd. (TSX-BB, NASDAQ-BBRY), but I used to. I always liked tech stocks and this was a fast rising tech stock when I bought it. I made money because I had bought and sold it before it peaked in 2010. I do not tend to hold tech stocks for the long term.

One thing that is noticeable is the amount of stock options John Chen, the Chairman and CEO has. Currently his options are 1.83% of the market cap. This is down from 2.51% he used to own but it is still quite high. John Chen now owns shares worth $21M CDN$. Prior to this year his ownership was under $1M CDN$. This may be a buy signal in itself.

When I look at my spreadsheet all I see is red. I think that whether John Chen can turn this company around or not is still up in the air. A lot of analysts think that John Chen will turn the company around, but it has not started to turn yet.

The only positive I see is the debt ratios. The Long Term Debt/Market Cap Ratio is very low at 0.16 for 2017. The Liquidity Ratio and Debt Ratios at 2.79 and 2.71 for 2017 are very good where I like them to be at 1.50 and above. The Leverage and Debt/Equity Ratios are also quite good at 1.59 and 0.59 respectively. This means that the company is still viable. Financial year ends in February of each year.

Because of the last 5 years have had negative earnings, Price/Earnings Ratios for the past 5 and 10 years are not viable measures. However, the historical ones are. The low, median and high median historical Price/Earnings per Share Ratios are 10.13, 18.09 and 30.32. The current P/E Ratio is 17.92 based on a stock price of $11.14 CDN$ and 2018 EPS estimate of $0.62 CDN$ ($0.49US$). This stock price testing suggests that the stock price is relatively reasonable and below the median.

The current Graham Price is $8.49 CDN$. The 10 year low, median and high median Price/Graham Price Ratios are 0.89, 1.25 and 1.59 CDN$. The current P/GP Ratio is 1.31 based on a stock price of $11.14 CDN$. This stock price testing suggests that the stock price is relatively reasonable but above the median.

The 10 year median Price/Book Value per Share Ratio is 1.91. The current P/B Ratio is 1.70 based on Book Value of $2,738M US$, Book Value per Share of $5.15 US$ and Stock Price of $8.78 US$. The current P/B Ratio is some 11% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median. You would get a similar results using CDN$ values.

The 10 year median Price/Sales (Revenue) Ratio is 1.80 US$. The current P/S Ratio is 4.59 US$ based on 2018 Revenue Estimate of 1,016M US$, 2018 Revenue per Share estimate of $1.91 US$ and a stock price of $8.78 US$. The current ratio is 156% higher than the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. You would get a similar results using CDN$ values.

There are still a number of analysts following this stock. When I look at analysts' recommendations, I find Buy, Hold and Underperform recommendations. There is only one buy out of 20. Most of the recommends are a Hold. The 12 month price consensus is $8.84 US$ or $11.21 CDN$. This implies a total return of 0.66% all from capital gains.

Joey Frenette of Motley Fool thinks that the turnaround for this company is real, but it will take some time. Tom Taulli at Investor Place gives 3 reasons against the bullish case for this company. Alan Innes on Learn Bonds talks about Goldman Sachs starting coverage of this company with a Sell and the consequences of this. See what analysts are saying at Stock Chase. Their views are quite mixed.

BlackBerry Limited provides mobile communications solutions. The Company is engaged in the sale of smartphones and enterprise software and services. Based in Waterloo, Ontario, BlackBerry operates offices in North America, Europe, Middle East and Africa, Asia-Pacific, and Latin America. Its web site is here BlackBerry Ltd.

The last stock I wrote about was about was EnerCare Inc. (TSX-ECI, OTC-CSUWF)... learn more. The next stock I will write about will be ONEX Corp. (TSX-OCX, OTC-ONEXF)... learn more on Friday, August 18, 2017 around 9 am. Tomorrow on my other blog I will write about Liquidity Ratio... learn more on Thursday, August 17, 2017 around 5 pm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

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