BlackBerry (NASDAQ: BB) is navigating choppy waters, but it's showing signs of a promising debt management strategy. Despite a net income loss of 734M, the software giant maintains a healthy total stockholder equity of 857M, surpassing its total liabilities of 822M. This indicates a solid foundation for BlackBerry's
financial health. Moreover, BlackBerry's EBIT of 410M, coupled with a goodwill of 595M, further demonstrates its financial resilience. However, the company's free cash flow shows a loss of 304M, suggesting a need for improved cash management. Despite this, analysts seem to be betting on BlackBerry's potential, with two buys and one strong buy on record. In a nutshell, BlackBerry's current financial leverage could potentially lead to a successful debt management outcome, but it is crucial for the company to improve its cash flow and net income in the long run. BlackBerry is set to release its earnings report today, with the upcoming quarterly report anticipated on April 4, 2024. The stock is currently trending towards a buyout. Based on recent years' data, BlackBerry's Days of Payables Outstanding is expected to decrease significantly. The Price to Operating Cash Flows Ratio for the current year is projected to rise to 164.85, while the Short Term Coverage Ratios are predicted to drop to 0.04. Given that many millennials are steering clear of the software space, it's worthwhile to delve deeper into BlackBerry's current market trends.
BlackBerry financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures the total debt position of BlackBerry, including all of BlackBerry's outstanding debt obligations, and compares it with the equity. In simple terms, the high financial leverage means the cost of production, together with running the business day-to-day, is high, whereas, lower financial leverage implies lower fixed cost investment in the business and generally considered by investors to be a good sign. So if creditors own a majority of BlackBerry assets, the company is considered highly leveraged. Understanding the
composition and structure of overall BlackBerry debt and outstanding corporate bonds gives a good idea of
how risky the capital structure of a business is and if it is worth investing in it. Please read more on our
technical analysis page.
Understanding BlackBerry Total Debt
BlackBerry liabilities are broken down into two parts on the balance sheet. These are short-term (or current) obligations and long-term debt. BlackBerry has to fulfill its short-term liabilities in this reporting year and should be no more than 12 months old. Long-term debt, on the other hand, is anything beyond the 12-month payment timeframe. Common short-term liabilities found on BlackBerry balance sheet include debt obligations and money owed to different BlackBerry vendors, workers, and loan providers. Below is the chart of BlackBerry main long-term debt accounts currently reported on its balance sheet.
You can use BlackBerry
financial leverage analysis tool to get a better grip on understanding its financial position
How important is BlackBerry's Liquidity
BlackBerry
financial leverage refers to using borrowed capital as a funding source to finance BlackBerry ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. BlackBerry financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to BlackBerry's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of BlackBerry's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the
breakdown between BlackBerry's total debt and its cash.
Breaking down BlackBerry Further
The firm generated the yearly revenue of 656
M. Annual Net Loss to common stockholders was (734
M) with gross profit of 467
M.
Asset Breakdown
2.1 B
Non Current Assets Total
1.1 B
Total Current Assets
| Total Assets | 4.83 Billion |
| Non Current Assets Total | 2.14 Billion |
| Other Current Assets | 49.4 Million |
| Total Current Assets | 1.14 Billion |
| Other Assets | 119.7 Million |
| Non Currrent Assets Other | 191.82 Million |
| Intangible Assets | 980.97 Million |
| Net Tangible Assets | 2.39 Billion |
"Never put all your eggs in one basket" is a common saying in the finance world, and it seems BlackBerry (NASDAQ: BB) is taking this to heart with their debt management strategy. With total debt standing at $419M, the company is leveraging its net assets of $1.68B to manage its liabilities effectively.
BlackBerry's current liabilities amount to $826.98M, but with a net working capital of $14M and a net debt of $124M, the company appears to be in a position to manage its debt effectively. However, a net income loss of $734M indicates that the company is facing challenges in generating profits. With a beta of 1.09, BlackBerry carries a moderate level of market risk, but its strategic debt management could potentially lead to financial success. .
BlackBerry is expecting lower volatility in May
BlackBerry's recent Value At Risk (VaR) decrease to -6.79 may signal a potential price drop. VaR, a statistical measure of financial risk over a specific time frame, indicates that BlackBerry may experience lower volatility in May. However, this could also lead to a price reduction, warranting investor caution. Despite this, reduced volatility could foster a more stable trading environment for long-term investors. BlackBerry shows very low volatility, with skewness of -1.06 and kurtosis of 5.94. Understanding
market volatility trends can help investors time the market. Using volatility indicators allows traders to measure BlackBerry's stock risk against market volatility during bullish and bearish trends.
Bear market volatility can impact
BlackBerry's stock price, causing stress for investors as they see their shares' value decline, often prompting portfolio rebalancing with different financial instruments. Despite a modest market slip, BlackBerry (USA Stocks:BB) continues to show promising growth potential. With a
Valuation Market Value of 2.83, and a
Valuation Real Value of 3.38, the company's stock is currently undervalued, indicating a potential upside for investors. The Analyst Overall Consensus rates the stock as a 'Buy', with two analysts recommending 'Buy' and one strongly endorsing a 'Buy'. The highest estimated target price from analysts stands at 5.83, suggesting a possible upside price of 6.83. However, investors should also consider the possible downside price of 0.0283. In conclusion, despite some market volatility, BlackBerry's strong
fundamentals and positive
analyst consensus make it a potentially profitable investment. .
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Gabriel Shpitalnik is a Member of Macroaxis Editorial Board. Gabriel is a young entrepreneur and writes predominantly on the business, technology, and finance sector. He likes to analyze different equity instruments across a wide range of industries focusing primarily on consumer products and evolving technologies.
View Profile This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Gabriel Shpitalnik do not own shares of BlackBerry. Please refer to our
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