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BlackBerry (TSX:BB) has caught investor attention after a mixed run in its share price, with the stock showing a gain over the past month alongside a decline in returns over the past three months and the past year.
See our latest analysis for BlackBerry.
At a current share price of CA$5.40, BlackBerry’s recent 30 day share price return of 4.25% contrasts with a 90 day share price decline of 17.43% and a 1 year total shareholder return decline of 6.90%, suggesting momentum has been fading after a short term bounce.
If BlackBerry’s mixed performance has you reassessing your watchlist, this could be a good moment to check out high growth tech and AI stocks as another way to spot opportunities in software and security focused names.
With BlackBerry posting annual revenue of $534.8 million, net income of $21.1 million and an intrinsic value estimate suggesting roughly a 14% discount, you have to ask: is this a genuine entry point, or is the market already pricing in future growth?
BlackBerry trades on a P/E of 108.5x, which, at a CA$5.40 share price, points to a rich earnings multiple compared with both peers and its own fair value markers.
The P/E ratio compares the current share price with earnings per share. For a software and security focused company like BlackBerry, it often reflects how much future earnings growth investors are willing to pay for today.
Here, the market price implies investors are paying more for each dollar of earnings than for the average Canadian software stock, with BlackBerry on 108.5x versus an industry average of 45.5x and a peer group average of 52.1x. Our estimated fair P/E of 35.4x is also far lower than the current multiple. This suggests a level that prices in a more moderate view of future earnings than the market currently does.
Explore the SWS fair ratio for BlackBerry
Result: Price-to-Earnings of 108.5x (OVERVALUED)
However, BlackBerry’s rich 108.5x P/E and 5 year total shareholder return decline of 76.44% highlight sentiment risks if earnings or execution disappoint from this point onward.
Find out about the key risks to this BlackBerry narrative.
While the 108.5x P/E suggests BlackBerry is expensive, our DCF model points the other way. With an estimated fair value of CA$6.27 versus today’s CA$5.40, the shares sit around 14% below that mark. Is the high multiple a warning sign, or is the DCF hinting at mispriced potential?
