Author: admin

Track your investments for FREE with Simply Wall St, the portfolio command center trusted by over 7 million individual investors worldwide.

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?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out BlackBerry for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 866 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match – so you never miss a potential opportunity.

If you see the numbers differently, or simply prefer to piece together your own view from the data, you can build a custom thesis in just a few minutes with Do it your way.

A great starting point for your BlackBerry research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

If BlackBerry has sparked fresh questions about where to focus next, do not stop here, there are plenty of other angles worth your attention right now.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include BB.TO.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com