Can New Products Help BlackBerry Move Higher?

With shares of BlackBerry (NASDAQ:BBRY) trading around $10, 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 Movement

BlackBerry 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 such as email, voice, instant messaging, SMS, Internet, intranet-based applications, and browsing. Its products and services feature 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 is continuing to roll out new smartphone devices despite the uncertainty the company is facing in regards to whether the struggling smartphone maker will be purchased as a whole or split up into parts. BlackBerry launched its first “phablet,“ or smartphone with a screen 5 inches or bigger, Wednesday, Reuters reports. The Z30 is being launched at an event in Malaysia. Many are skeptical that the new device will gain much traction, as the phablet concept is relatively new and uncertainty about BlackBerry’s future is overshadowing its devices.

T = Technicals on the Stock Chart Are Mixed

BlackBerry stock has been fairly volatile over the past several quarters. The stock is currently attempting to establish value after its latest 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 between its key averages, which signals neutral price action in the near term.

BBRY

Source: Thinkorswim

Taking a look at the implied volatility 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

79.08%

66%

65%

What does this mean? This means that investors or traders are buying a significant amount of call and put options contracts, as compared to the last 30 and 90 trading days.

Put IV Skew

Call IV Skew

October Options

Flat

Average

November Options

Flat

Average

As of Wednesday, there is average demand from call buyers or sellers and low demand by put buyers or high demand by put sellers, all neutral to bullish over the next two months. To summarize, investors are buying a significant amount of call and put option contracts and are leaning neutral to bullish over the next two months.

E = Earnings Are Decreasing Quarter Over Quarter

Rising 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 Q2

2013 Q1

2012 Q4

2012 Q3

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 mostly decreasing earnings and revenue figures over the last four quarters. From these numbers, the markets have not been pleased with BlackBerry’s recent earnings announcements.

P = Weak Relative Performance Versus Peers and Sector

How has BlackBerry stock done relative to its peers – Apple (NASDAQ:AAPL), Google (NASDAQ:GOOG), and Nokia (

target=”_blank”>NYSE:NOK

) — and sector?

BlackBerry

Apple

Google

Nokia

Sector

Year-to-Date Return

-10.30%

-12.70%

24.98%

64.81%

17.71%

BlackBerry has been a poor relative performer, year to date.

Conclusion

BlackBerry provides innovative wireless communication products to consumers and companies worldwide. The company is rolling out new products despite the uncertainty of recent releases. The stock has not done very well as of late and is currently trading sideways as it attempts to establish value. Over the last four quarters, investors have not been pleased, as earnings and revenues have mostly been decreasing. Relative to its peers and sector, BlackBerry has been a weak year-to-date performer. WAIT AND SEE what BlackBerry does this coming quarter.

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