RIM: Sentiment Drops Ahead of Earnings

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 |  About: BlackBerry Ltd. (BBRY)
by: Jett Winter

Research in Motion (RIMM) is scheduled to release Q3 earnings this Thursday December 17, after the market closes.

Average analyst estimates for the Blackberry maker are $1.04/share in EPS and $3.79 billion in Revenue. Forty analysts track the stock with three upward EPS revisions in the last 30 days and no downward EPS revisions in the last 30 days.

Last quarter, Research in Motion beat average analysts expectations by .03/shr or 3.0%, 1.03/shr vs. 1.00/shr. But they disappointed on revenue and the stock plummeted.

I always find this a tough period waiting to see if the company is going meet, exceed, or miss their earnings estimates. One thing I have discovered of value is to analyze sentiment moves in a stock ahead of the company’s earnings release. In the case of Research in Motion, I will use the piqqem sentiment index for Research in Motion to see how sentiment has changed in the last quarter, for the months within that quarter, and from the end of the reporting quarter through today.

I’m looking for moves or changes that may foreshadow the earning release. (piqqem leverages the ‘wisdom of crowds’ by allowing its users to vote on the price direction of a stock and then applies its own propriety factors to calculate sentiment for a security. In their model, -100 is the lowest and 100 is the highest sentiment).

Sentiment for RIMM

Click to enlarge

Source Piqqem

The above chart shows Research in Motion’s sentiment dropping by 15 pts from the beginning of the quarter to today, with a disturbing decrease of 9 pts from the end of the quarter through today. This last indicator has historically been the most accurate indicator regarding an earnings surprise, both upside and downside. On the Piqqem scale, Research in Motion’s sentiment rating of 18.54 indicates moderate quality and this is considered a hold. Only Research in Motion knows their actual results, but their current sentiment points to Research in Motion just meeting or missing earnings estimates on Thursday.

Disclosure: No Positions