With shares of Research In Motion (NASDAQ:BBRY) trading around $15, is BBRY an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:
T = Trends for a Stock’s Movement
Research In Motion is a designer, manufacturer, and marketer of wireless solutions for the worldwide mobile communications market. Through the development of integrated hardware, software and services, it provides platforms and solutions for seamless access to information, including e-mail, voice, instant messaging, SMS, Internet and intranet-based applications and browsing. Its portfolio of products, services and embedded technologies are used by thousands of organizations and millions of consumers around the world and include the BlackBerry wireless solution, the RIM Wireless Handheld product line, the BlackBerry PlayBook tablet, software development tools and other software and hardware. Several economies around the world are growing and adopting new technologies in their daily lives. Also, the company has recently rebranded its products which may offer a boost to their bottom line. With populations around the world incorporating mobile products into their lives at an increasing rate, as one of the top providers, Research In Motion is poised to see a rise in profits.
T = Technicals on the Stock Chart are Strong
Research In Motion stock has seen a decline in its stock price since reaching highs in 2008. However, the stock is now seeing a monster bounce as the company is reshaping its products and brand. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Research In Motion is trading above its rising key averages which signal neutral to bullish price action in the near-term.
(Source: Thinkorswim)
Taking a look at the implied volatility (red) and implied volatility skew levels of Research In Motion options may help determine if investors are bullish, neutral, or bearish.
| Implied Volatility (IV) | 30-Day IV Percentile | 90-Day IV Percentile | |
| Research In Motion Options | 63.52% | 23% | 25% |
What does this mean? This means that investors or traders are buying a very significant amount of call and put options contracts, as compared to the last 30 and 90 trading days.
| Put IV Skew | Call IV Skew | |
| May Options | Average | Average |
| June Options | Average | Average |
As of today, there is an average demand from call or put buyers or sellers, all neutral over the next two months. To summarize, investors are buying a very significant amount of call and put option contracts and are leaning neutral over the next two months.
On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.
E = Earnings Are Decreasing Quarter-Over-Quarter
Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on Research In Motion’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Research In Motion look like and more importantly, how did the markets like these numbers?
| 2013 Q1 | 2012 Q4 | 2012 Q3 | 2012 Q2 | |
| Earnings Growth (Y-O-Y) | -78.23% | -96.08% | -171.43% | -174.44% |
| Revenue Growth (Y-O-Y) | -41.26 | -47.21% | -31.07% | -42.66% |
| Earnings Reaction | -0.89% | -22.73% | 5.04% | -19.05% |
Research In Motion has seen decreasing earnings and revenue figures over the last four quarters. From these figures, the markets have been disappointed with Research In Motion’s recent earnings announcements.
P = Excellent Relative Performance Versus Peers and Sector
How has Research In Motion stock done relative to its peers, Apple (NASDAQ:AAPL), Google (NASDAQ:GOOG), Nokia (NYSE:NOK), and sector?
| Research In Motion | Apple | | Nokia | Sector | |
| Year-to-Date Return | 30.50% | -19.24% | 15.79% | -15.95% | 7.06% |
Research In Motion has been a relative performance leader, year-to-date.
Conclusion
Research In Motion provides mobile communications products to growing populations who are adopting these technologies at an increasing rate. The stock has suffered significantly over the last few years but has made significant positive progress in recent months. With the restructuring of the company, earnings and revenue figures are still being worked on. However, investors have not been too impressed by recent earnings reports. Relative to its peers and sector, Research In Motion has been a performance leader, year-to-date. Look for Research In Motion to OUTPERFORM.
No comments:
Post a Comment