Is BlackBerry Poised To Beat Earnings Estimates? - Analyst Blog

Canadian handset manufacturer BlackBerry Limited BBRY is scheduled to report first-quarter fiscal 2015 financial numbers before the opening bell on June 19, 2014.

In the last reported quarter, the company had delivered an impressive 85.71% positive earnings surprise. Let's see how things are shaping up for this announcement.

Factors Likely to Influence This Quarter

Smartphones have emerged as the new next-generation choice, taking over a significant chunk of the market share from basic mobile handsets. Several emerging markets are witnessing a surge in the demand for smartphones, which in turn, is providing the company with potent growth opportunities in international markets (outside the U.S. and Canada). The company has established effective sales distribution networks with 565 wireless carriers in over 175 countries.

In an attempt to revive its sinking demand for handsets in emerging markets, BlackBerry revealed the budget-friendly, full-touch Z3 smartphone in Jakarta which proved to be an instant hit therein.

On the flip side, stiff competition from handset manufacturers, escalating marketing expenses and lukewarm response for the new BB10 operating platform will continue to act as headwinds for the company.

We remain concerned about BlackBerry's decision to change the business model of its high-margin services fees segment. As per the new structure, only those subscribers, who opt for advanced services including greater security, will continue to pay service fees. Other customers will generate little or no service revenues.

Earnings Whispers?

Our proven model does not conclusively show that BlackBerry is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. Unfortunately, this is not the case here as elaborated below. The Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.

Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate are poised at a loss of 28 cents. Hence, the ESP is 0.00%.

Zacks Rank: BlackBerry holds a Zacks Rank #2 (Buy) which increases the predictive power of ESP.

However, Blackberry's ESP of 0.00% when combined with a Zacks Rank #2 makes surprise prediction difficult.

Other Stocks to Consider

Here are some other companies to consider as our model shows these have the right combination of elements to post an earnings beat this quarter.

AmericaMovil S.A.B. de C.V. AMX, with earnings ESP of +6.52% and a Zacks Rank #3 (Hold).

Gogo Inc. GOGO, with earnings ESP of +4.35% and a Zacks Rank #3.

T-Mobile US, Inc. TMUS, with earnings ESP of +8.33% and a Zacks Rank #3.