Last update on 2024-05-05

BlackBerry (BB) - Piotroski F-Score Analysis for Year 2022 (Final Score: 5/9)

Analyzed Piotroski F-Score for BlackBerry (BB) in 2022 with a final score of 5/9. Explore the company's financial strengths and weaknesses through critical criteria such as net income, cash flow, and leverage.

Short Analysis - Piotroski Score: 5

We're running BlackBerry (BB) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

We're looking at BlackBerry (BB) through the Piotroski F-Score to gauge its financial health. They got a score of 5, which is middle of the road. They made a net profit, which is good because it shows they're more than breaking even. However, their cash flow from operations was negative, meaning they spent more money running the business than they made from it, which isn't great. Their assets are being used a bit better than before to make money, but there's room for improvement. They also managed to decrease their debt compared to their equity, which means they're getting better at managing what they owe versus what they own. Their current ratio went up, showing they're in a better position to pay off short-term debts, which is a positive sign. On the downside, they diluted their shares by issuing more, which can lower the value of each share. Operating efficiency seems a bit shaky since their gross margin decreased, indicating they're making less profit on their sales. However, they're slightly more efficient in using their assets to generate sales compared to last year. So, it's a bit of a mixed bag with some positive signs and areas that need work.

Insights for Value Investors Seeking Stable Income

For an investor, BlackBerry's situation is kinda iffy. They have some good things going, like making a profit and better asset use, but the negative cash flow and share dilution aren't ideal. If you're thinking about investing, you'd need to weigh the positives against the negatives carefully. It could be worth a shot if you believe in their recovery and long-term strategy, but definitely, do more research and maybe keep an eye on them to see if they start showing more consistent improvements across the board.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of BlackBerry (BB)

Company has a positive net income?

The net income criterion assesses whether BlackBerry (BB) made a profit or loss in the year. It's important because it shows if the company was financially healthy and successful in making more money than it spent.

For 2022, BlackBerry (BB) posted a net income of $12,000,000, which is positive. Hence, according to the Piotroski score criterion for net income, BlackBerry (BB) earns 1 point for having a positive net income in 2022. This result is favorable because it indicates that BlackBerry was profitable, contrasting starkly with the financial struggles it faced in preceding years. If we examine the trend over the last 20 years, it's evident that BlackBerry's financial performance has fluctuated significantly, with periods of substantial profit followed by years of considerable losses. The positive net income in 2022 marks a crucial improvement from the previous year's loss of $1,104,000,000, highlighting a potential turning point in the company’s financial health. Thus, judging by this criterion alone, BlackBerry's positive net income in 2022 is an encouraging sign for investors, as it suggests the company's operations have generated surplus funds beyond their expenses.

Company has a positive cash flow?

The Cash Flow from Operations (CFO) criterion investigates the money the company earned through its regular business activities, minus the operating expenses. This is crucial as it reflects the company's ability to generate cash, which is essential for funding operations, expanding the business, and returning value to shareholders.

For BlackBerry (BB) in 2022, the CFO was -28000000, indicating the company spent more money operating its business than it made. This results in a score of 0 for this criterion, marking a negative trend. However, looking at the additional data provided over the last 20 years, we see that BlackBerry's cash flow from operating activities has varied significantly. It has experienced periods of strong positive cash flow, such as in 2008 through 2011, indicating robust business operations during these years. But, it has also faced years with negative cash flow like in 2012, 2017, and 2022, signaling challenges in generating sufficient cash from its core business activities. This fluctuating pattern suggests BlackBerry has encountered varying degrees of success and struggle in managing its operating cash flow over the years.

Return on Assets (ROA) are growing?

Understanding the change in ROA from -0.3293 to 0.0045 is crucial for evaluating BlackBerry's efficiency in generating profit from its assets, indicating its financial health.

The change in ROA for BlackBerry from -0.3293 in 2021 to 0.0045 in 2022 shows a significant improvement in how effectively the company is using its assets to generate earnings. This positive change means BlackBerry has shifted from a considerable loss on its assets to a slightly positive return within a year, which is a good sign of recovery and better financial management. Considering the trend over the last 20 years, where ROA has fluctuated significantly, peaking during the 2008-2011 period with high operating cash flow, this upward shift in 2022 suggests a potential reversal from the recent years of low or negative ROA. It highlights a positive development, especially when looking at the broader industry context, where the median ROA has been relatively stable. BlackBerry's performance in 2022, moving closer to positive territory, marks an improvement, but it still has a long way to go compared to the industry median, which remained above 0.65 over the same period. The improvement in ROA adds 1 point to BlackBerry's score, indicating a step in the right direction, although continued progress is needed to reach and surpass the industry standard.

Operating Cashflow are higher than Netincome?

This criterion checks if the company's operations generate more cash than what is reported as profit. It is essential because it shows that the company’s operations are healthy and it's making real money, not just accounting profits.

For BlackBerry in 2022, the Operating Cash Flow is -$28,000,000 while the Net Income is $12,000,000, meaning the Operating Cash Flow is not higher than Net Income. Thus, according to this criterion, it would score 0. This trend is concerning because it implies that the income reported (a positive $12 million) might not fully reflect the cash being spent to operate the business. Instead of generating cash from its operations, BlackBerry actually consumed more cash than it earned in profit. This is a red flag for potential investors and could indicate operational issues that the net income number does not reveal.

Liquidity of BlackBerry (BB)

Leverage is declining?

Comparing leverage across years helps to determine how the company's debt level is changing relative to its equity, indicating financial stability or risk.

Although the leverage for BlackBerry (BB) decreased from 0.2874 in 2021 to 0.2232 in 2022, meaning there's less debt relative to equity, the trend over the last 20 years shows volatility. Initially, leverage was minimal, reaching zero between 2009 and 2013, then spiked in 2014, suggesting a strategic shift or response to financial challenges. The decrease in 2022, while positive in reducing financial risk, needs context: Is it due to debt reduction, equity increase, or both? This wise management of debt-to-equity ratio in recent years signals caution but also highlights previous periods of financial pressure or operational restructuring.

Current Ratio is growing?

The Current Ratio measures a company's ability to pay short-term obligations with short-term assets. Increased Current Ratio indicates improved liquidity, essential for meeting obligations and investing in opportunities.

Comparing the Current Ratio of BlackBerry in 2022 (2.6272) to that in 2021 (2.345), we observe an increase. This movement suggests that BlackBerry has enhanced its ability to cover its short-term liabilities with its short-term assets. Such an improvement is usually perceived positively, as it indicates better financial health and liquidity. In the context of a 20-year historical perspective, BlackBerry's Current Ratio has experienced fluctuations, with peaks and troughs aligning with its operational and financial shifts. In 2022, the Current Ratio not only increased from the previous year but also surpassed the industry median (1.5633), highlighting BlackBerry's stronger liquidity position relative to its peers. This trend suggests that BlackBerry manages its short-term assets and liabilities more efficiently than many competitors, possibly due to strategic financial management or improvements in operational efficiency. This comparison underscores BlackBerry's liquidity strength and potential resilience against short-term financial challenges.

Number of shares are diluted?

When we talk about Outstanding Shares, we're looking at how many shares of a company are currently owned by all its shareholders. It's important because it can tell us if a company is issuing more shares (diluting ownership) or buying them back (concentrating ownership).

Looking at BlackBerry's Outstanding Shares, they increased from 561,305,000 in 2021 to 631,440,000 in 2022. In simple terms, it means BlackBerry put more shares into the market. Usually, issuing more shares can dilute existing shareholders' value, meaning your piece of the pie gets smaller even if the pie itself might be getting bigger. For Piotroski score, this trend goes in the opposite direction of what we're looking for to add a point, so we give it a score of 0. However, it's important to note trends over time too. Over the last 20 years, BlackBerry's shares went from 474,001,350 in 2002 up to 631,440,000 in 2022, with some ups and downs in between. This shows that while the absolute number of shares has increased over the years, the company has also had periods of reducing its shares outstanding, which indicates attempts at managing shareholder value in various market conditions.

Operating of BlackBerry (BB)

Cross Margin is growing?

Change in Gross Margin measures if a company is making more money for each sale after covering the costs of its products. It's essential because it indicates operational efficiency and profitability.

The statement that Gross Margin has increased in 2022 is incorrect. Comparing 2022's Gross Margin of 0.6504 to 2021's 0.72 shows a decrease, not an increase. This indicates a declining trend in operational efficiency or heightened costs relative to sales, which is usually a negative sign. When looking at the entire 20-year chart, BlackBerry's Gross Margins have been fluctuating significantly, with a peak in 2019 and a gradual decline to the current value. Considering the industry's median Gross Margin trends for the last 20 years, BlackBerry's Gross Margin was above the industry median in the early 2010s, peaked significantly in 2018-2019, and has since declined below the industry standard in 2022. This comparative decline highlights operational challenges or competitive pressures BlackBerry may be facing, despite periodic recoveries in its operational efficiency.

Asset Turnover Ratio is growing

Change in Asset Turnover compares how effectively a company uses its assets to generate sales over two periods. A rise means more efficient use of assets.

Comparing the Asset Turnover ratios of 0.2667 in 2022 with 0.2663 in 2021, there's a slight increase indicating BlackBerry (BB) has become marginally more efficient in using its assets to generate sales over the year. Although the increase is very minimal (from 0.2663 to 0.2667), it represents an improvement in efficiency. With this trend, we assign 1 point, acknowledging the positive tilt in how effectively BlackBerry is deploying its resources to drive sales. The additional data showing the last 20 years of Asset Turnover demonstrates a broader trend where BlackBerry has seen a significant decline in its asset turnover ratio from its peak. Such a historical context emphasizes the importance of any improvement, no matter how slight. Over the years, BlackBerry transitioned from being a hardware (mobile phone) manufacturer to focusing more on software and services which likely contributed to changes in how assets were utilized and the different turnovers seen. The slight increase in 2022 serves as a potentially positive signal within a wider narrative of recovering operational efficiency after years of decline.