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BlackBerry (TSX:BB) Stock Soars on its Latest Q4 Earnings Beat: Will This IoT Company Be Next?

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BlackBerry (TSX:BB)(NYSE:BB) stock soared last Friday on the back of record sales that helped the Waterloo-based technology firm nearly double analyst forecasts for its fourth-quarter earnings.

The strong performance was led by double-digit growth in BlackBerry’s software and services division, which reported double-digit revenue growth for the year, including a new sales record for the fourth quarter.

In announcing the results, CEO John Chen remarked on the fact that BlackBerry has successfully transitioned itself from that of a mobile device manufacturer and is now recognized as a +$1 billion revenue company in security software.

Chen went on to say that he continues to see strong potential for opportunities within the enterprise market, helping organizations to generate value from the Internet of Things (IoT).

What’s interesting to note about Chen’s comments is that there’s another Canadian technology firm that has its own aspirations within the IoT market.

Sierra Wireless (TSX:SW)(NASDAQ:SWIR) is going through its own transformation to become a global IoT solutions and services provider. It is also coming off a strong showing in the fourth quarter that saw the company grow its sales by 15% for the full year, including 10% top-line growth in the fourth quarter.

Yet, while BlackBerry stock is already up 41% this year, Sierra Wireless stock is down a little under 10% so far in 2019. The best reason that I can come up with for this is that BlackBerry and CEO Chen were out in front of the IoT long before Sierra. Also, these types of organizational restructurings tend to take some time.

And it would seem to me, at least, as though the market may have missed this fact and may be overly focused on Sierra’s most recently reported quarterly performance, which included a net loss of -$0.11 per share.

However, what’s missing from those headline figures was a very strong showing from the company’s IoT business division, including a 161% increase in sales last year, including 89% top-line growth in the fourth quarter alone.

Now, the fact that sales at Sierra slowed in the fourth quarter compared to the first nine months of the year might be viewed as somewhat concerning to some.

One could make the argument that perhaps momentum in the company’s sales division is slowing, or you could also make the argument that maybe Sierra is in the process of putting some of its underperforming products on the shelf as it reinvests in the future.

Bottom line

Only time will tell how this one eventually plays out.

Even though I’ve been bullish on BlackBerry’s prospects for quite some time now, following this latest run up in the company’s share price, I think I’d tend to be favouring the relative value offered by Sierra Wireless shares instead.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Jason Phillips has no position in any of the stocks mentioned. The Motley Fool owns shares of BlackBerry. BlackBerry is a recommendation of Stock Advisor Canada.

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