Long-established in the Software industry, BlackBerry Ltd (BB, Financial) has enjoyed a stellar reputation. However, it has recently witnessed a daily loss of 5.31%, juxtaposed with a three-month change of -24.37%. Fresh insights from the GF Score hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of BlackBerry Ltd.
Understanding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 5/10
- Profitability rank: 3/10
- Growth rank: 2/10
- GF Value rank: 8/10
- Momentum rank: 10/10
Based on the above method, GuruFocus assigned BlackBerry Ltd the GF Score of 67 out of 100, which signals poor future outperformance potential.
BlackBerry Ltd: A Snapshot
BlackBerry, once known for being the world's largest smartphone manufacturer, is now exclusively a software provider with a stated goal of end-to-end secure communication for enterprises. The firm provides endpoint management and protection to enterprises, specializing in regulated industries like government, as well as embedded software to the automotive, medical, and industrial markets. With a market cap of $2.08 billion and sales of $825 million, the company's operating margin stands at -17.9%.
Financial Strength Analysis
BlackBerry Ltd's financial strength indicators present some concerning insights about the company's balance sheet health. The company has an interest coverage ratio of 0, which positions it worse than 0% of 1577 companies in the Software industry. This ratio highlights potential challenges the company might face when handling its interest expenses on outstanding debt. The company's Altman Z-Score is just -0.72, which is below the distress zone of 1.81. This suggests that the company may face financial distress over the next few years.
Profitability Analysis
BlackBerry Ltd's low Profitability rank can also raise warning signals. The company's Operating Margin has declined over the past five years, as shown by the following data: 2019: -7.30; 2020: -17.60; 2021: -10.97; 2022: -29.81; 2023: -34.15. Additionally, BlackBerry Ltd's Gross Margin has also declined over the past five years, as evidenced by the data: 2019: 77.21; 2020: 73.37; 2021: 72; 2022: 65.04; 2023: 63.87. This trend underscores the company's struggles to convert its revenue into profits.
Growth Prospects
A lack of significant growth is another area where BlackBerry Ltd seems to falter, as evidenced by the company's low Growth rank. The company's revenue has declined by -15 per year over the past three years, which underperforms worse than 87.23% of 2396 companies in the Software industry. Stagnating revenues may pose concerns in a fast-evolving market. Lastly, BlackBerry Ltd predictability rank is just one star out of five, adding to investor uncertainty regarding revenue and earnings consistency.
Conclusion
Given BlackBerry Ltd's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential underperformance. While the company has a rich history and a strong reputation, its current financial indicators suggest that it may struggle to maintain its past performance. Investors should consider these factors when making investment decisions.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
