BB

BlackBerry has completed a genuine financial turnaround. After years of losses (including a -$734M FY2023), the company posted FY2026 net income of $53.2M (diluted EPS $0.09) on revenue of $549M, with operating income swinging to $48.3M and operating cash flow up 204.8% to $50.3M. The software business carries attractive economics — gross margin of 76.2% — and the company has cleaned up its balance sheet: total liabilities fell 13.3% to $499M, current liabilities dropped 22.1%, and equity grew to $746M against $275M cash and modest $197M long-term debt (0.67x liabilities/equity). It even repurchased $60.7M of stock. After a long restructuring, BlackBerry is finally profitable and cash-generative across its QNX (embedded/automotive software) and Secure Communications franchises.

The problem is that the market is already paying generously for this turnaround. Revenue grew just 2.7%, and at $8.38 the stock trades at 93x trailing EPS and 9.0x sales — multiples that imply substantial acceleration in growth and margins that the FY2026 results do not yet demonstrate. ROE is only 7.1%, and the company still carries a $2.17B accumulated deficit. The huge percentage gains in net income and operating income are off near-zero or negative bases, so they overstate the underlying improvement; the cleaner read is low-single-digit revenue growth with newly-positive but thin profitability.