Rimage (RIMG $14.55 2/17/2010)

I have been methodically going through a list of net-nets I pulled recently and I want to post a few that are worth looking into again.  Most of the net-nets are junk and are trading so low for a reason, below I have my notes on Rimage.

The company is a DVD/CD copying business which has been in a slowdown since the 90s for obvious reasons.  The company is trying to branch out into new markets but this hasn't been a significant effort yet.

139m marketcap
strip out the 113 in cash and securities and it’s a 26m EV with 2m of FCF
EV/FCF - 13 (9mo)
EV/EBIT - 3.23 (9mo trailing)
EV/EBITDA - 2.3 (ttm)

$11 per share in cash/marketable securities
9mo Sept 30 earned .53
Recent quarter EPS .24

Valuation thoughts
  • Earnings could be in the $1 range this year making this possibly a $20 stock, which is a 33% upside from here.
  • At a 7x EV/EBIT multiple the business value is around 56m, plus cash of 113 is about $17.73 a share. 
 Here is a link to my net-net breakdown spreadsheet: RIMG valuation spreadsheet