BlackBerry (TSX:BB) has long since shed its image as the maker of the once-iconic smartphones that ruled the early 2000s. Today, it stands as a major player in cybersecurity and Internet of Things (IoT) solutions, servicing industries that demand top-tier security and connected technologies. While the Canadian stock has faced challenges, including a recent dip in its stock price to levels not seen in years, this could be an excellent buying opportunity for investors. With its shares trading at just $5.86 on the TSX at writing, the potential upside for BlackBerry has rarely looked more compelling.

Into earnings

The Canadian stock's latest earnings report, covering the third quarter of fiscal 2025, showed mixed results. BlackBerry posted a non-GAAP earnings per share of $0.02, outperforming analyst expectations of a $0.01 loss. Revenue for the quarter came in slightly below estimates at $143 million, a 5.9% year-over-year decline.

While the revenue dip might cause hesitation, it's important to note the context. BlackBerry is undergoing a significant transformation, focusing its resources on high-growth areas like IoT and cybersecurity. These are already showing positive momentum. For example, the IoT segment reported an impressive 12% year-over-year revenue growth in the second quarter, highlighting its potential as a future revenue driver.

From a historical perspective, BlackBerry's journey is one of reinvention. Over the past decade, the Canadian stock has successfully pivoted away from hardware to become a software-first organization. This has been no small feat, and while the transition hasn't been without its hurdles, it has positioned BlackBerry as a leader in two key markets: cybersecurity, where demand for enterprise-grade solutions is at an all-time high, and IoT, which is becoming indispensable as industries embrace automation and connectivity. This pivot is reflected in its valuation metrics, with a forward price-to-earnings ratio of 37.04, signalling optimism about future profitability.

Future outlook

Looking ahead, BlackBerry has ambitious plans to enhance its profitability and revenue base. During its 2024 Investor Day, the company shared a roadmap that includes separating its IoT and cybersecurity businesses into standalone entities, allowing each to focus on its respective growth opportunities. This separation could unlock additional value for shareholders by making the two units more agile and competitive. Additionally, BlackBerry is targeting fiscal years 2026 and 2027 as key periods for revenue acceleration and operating efficiency.

Leadership changes have also strengthened the company's direction. The appointment of Tim Foote as chief financial officer in July 2024 marked a key milestone in BlackBerry's evolution. A long-time insider, Foote is tasked with steering the financial strategy during this transformative period. Under his guidance, BlackBerry has made strides in managing its debt-to-equity ratio, which currently stands at a manageable 34.15%.

BlackBerry's partnerships and innovations are further proof of its potential. Collaborations with leading tech companies have bolstered its credibility in cutting-edge fields like robotics and healthcare systems. These partnerships are not just about incremental improvements. These signal BlackBerry's commitment to driving innovation in industries that demand secure and reliable solutions. The moves also position the Canadian stock to benefit from broader industry trends, such as the adoption of artificial intelligence and machine learning in cybersecurity applications.

Foolish takeaway

BlackBerry's current valuation makes it particularly attractive. Trading at a price-to-sales ratio of 3.75 and a price-to-book ratio of 3.31, the stock is far from overvalued. Combined with its improving operating metrics, these figures suggest that the market may be underestimating the Canadian stock's long-term potential. Short interest in the stock has also decreased over the past month. And this could be an early indicator that bearish sentiment is waning.

The recent dip in BlackBerry's stock price should be viewed as an opportunity rather than a red flag. For long-term investors, this is a chance to buy into a company that is strategically positioned in two of the most critical markets of the future. With a clear vision, improving financials, and a commitment to innovation, BlackBerry is poised to bounce back.