Why BlackBerry (BBRY) Stock Is Gaining Today

NEW YORK (TheStreet) -- BlackBerry  (BBRY)BBRY was gaining 1.7% to $9.75 Monday after announcing the formation of a new business unit called BlackBerry Technology Solutions.

Sandeep Chennakeshu, former CTO of Sony-Ericsson, will lead the new business unit. BlackBerry Technology Solutions contains BlackBerry's entire patent portfolio, the QNX OS, Internet of Things platform Project Ion, cryptography applications subsidiary Certicom, and Paratek.

"Combining all these assets into a single business unit led by Sandeep will create operational synergies and new revenue streams, furthering our turnaround strategy," CEO John Chen said in a press release.

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TheStreet Ratings team rates BLACKBERRY LTD as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate BLACKBERRY LTD (BBRY) a SELL. This is driven by a few notable weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • BLACKBERRY LTD has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern earnings per share over the past two years. During the past fiscal year, BLACKBERRY LTD reported poor results of -$11.17 versus -$1.20 in the prior year.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Computers & Peripherals industry and the overall market, BLACKBERRY LTD's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to $302.00 million or 52.06% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The share price of BLACKBERRY LTD has not done very well: it is down 13.94% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • BBRY, with its very weak revenue results, has greatly underperformed against the industry average of 9.3%. Since the same quarter one year prior, revenues plummeted by 68.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • You can view the full analysis from the report here: BBRY Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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