What Do BlackBerry’s Recent 105% Gains Mean After Strong Cybersecurity Results?

If you have been sitting on the fence about BlackBerry, you are not alone. The stock has made quite a splash recently, and investors everywhere are wondering whether to get in now or wait it out. Just in the past week alone, BlackBerry’s shares surged by 18.6%, adding to a hefty 29.8% climb over the last month. Stretch that out to a year, and you are looking at a remarkable 104.5% return. These impressive numbers speak to something more than just short-term excitement, as they reflect shifting market sentiment and renewed optimism around BlackBerry’s pivot beyond its smartphone roots.

Some of this bullishness can be traced to ongoing developments in cybersecurity and enterprise software, where BlackBerry continues to extend its influence. But while momentum is strong, the big question most investors are grappling with now is about value: is BlackBerry still undervalued after this run-up, or are we already in overvalued territory?

To quantify things, BlackBerry’s valuation score comes in at just 1 out of 6. That means the company checks the box as undervalued by only one metric, which leaves room for skepticism. But are the usual metrics telling the whole story?

Let’s break down the popular valuation approaches, see how BlackBerry stacks up, and look for clues about what is really driving the numbers. And before we wrap up, I’ll show you a strategy for evaluating valuation that goes beyond standard scores, one that just might give you an edge.

BlackBerry scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: BlackBerry Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model estimates a company’s worth by projecting its future cash flows and discounting them back to today’s value. This approach helps investors figure out what BlackBerry might truly be worth, beyond day-to-day stock price swings.

For BlackBerry, the current Free Cash Flow stands at $17.3 Million. Analyst projections anticipate a steady build, with Free Cash Flow climbing to $154 Million by 2030. While analysts provide direct estimates for the next five years, additional projections beyond that are extrapolated to provide a full long-term picture.

Based on the most recent DCF model, the company’s fair value is estimated at $7.12 per share. With the stock currently trading just 3.3% below this intrinsic value, the model suggests BlackBerry is trading roughly in line with its long-term cash-generating potential.

Result: ABOUT RIGHT

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for BlackBerry.

Simply Wall St performs a valuation analysis on every stock in the world every day (check out BlackBerry's valuation analysis). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes.

Approach 2: BlackBerry Price vs Earnings (PE)

The Price-to-Earnings (PE) ratio is one of the most widely used valuation metrics for profitable companies because it puts a company’s current price into perspective relative to its actual ability to generate profits. When a business is consistently earning positive net income, the PE ratio allows investors to gauge how much they are paying for each dollar of earnings, making it straightforward to compare across companies and sectors.

It is important to note that what qualifies as a "fair" PE ratio depends heavily on expectations for future growth and the risks involved. Companies with high growth prospects or lower risk profiles tend to command higher PE multiples, while those facing tougher outlooks or industry headwinds generally trade lower.

Right now, BlackBerry’s PE ratio stands at a hefty 148.16x. To put that in context, the average PE for the software industry is 55.06x, and the average across BlackBerry’s selected peers is 78.54x. At first glance, BlackBerry’s multiple appears very stretched compared to these benchmarks.

This is where Simply Wall St’s proprietary Fair Ratio comes in. The Fair Ratio integrates not just broad industry comparisons but also factors unique to BlackBerry, such as its earnings growth, profit margins, market cap, and company-specific risks, to estimate the multiple most appropriate for this business right now. For BlackBerry, the Fair Ratio is 38.32x, considerably below its actual PE ratio.

Because the company’s PE is far above its Fair Ratio, the stock looks meaningfully overvalued using this metric, even after accounting for growth and risk factors unique to the business.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your BlackBerry Narrative

Earlier, we touched on a smarter way to understand value, and that is through Narratives. A Narrative goes beyond the numbers, letting you define your perspective on a company’s future by linking the company’s story to your own forecasts of revenue, profits, and margins, and arriving at a tailored fair value. Narratives give context to those financials, making them more personal and powerful, and they are easy to create and explore on Simply Wall St’s Community page, which is trusted by millions of investors.

By connecting a company’s outlook to updated forecasts and then comparing your fair value to the market price, Narratives help you decide if it is time to buy in or sit tight. They refresh automatically as new events, news, or earnings arrive. For example, one BlackBerry Narrative might project a fair value far above the current price based on rapid cybersecurity adoption, while another sees a lower fair value due to sluggish software growth. With Narratives, you can see and compare different viewpoints in real time and make well-informed decisions with confidence.

Do you think there's more to the story for BlackBerry? Create your own Narrative to let the Community know!

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.

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