Upon the nightly stock pondering I decided to repay my old pal RIMM a visit at FINVIZ.com
I had last checked this stock out in early April and was in for a surprise. it has since gone south around 45% and its sitting at a low PE of 5.63 (although to be fair it has had a decently low PE for a while). P/E ratio isn’t always indicative of an undervalued stock and it might well be the case that RIMM has lost its edge. I got rid of my Blackberry device in favor of android back in April hence why I forgot about this until now.
Reading their SEC filings it is obvious that the company is failing due to it being too slow to roll out competitive products and also because it has infringed on many patents there are dozens of Litigation’s going back to 2007 until recently March 2011 that are still work in progress.
Ran the annual income statements and balance sheets for the past 3 years through my valuation worksheets and the 3 year average Z-Score is very healthy, net profit margin has still remained in an uptrend and so is the total Asset Turnover. Return on equity and Return of Assets are also in a 3 year uptrend while gross profit margin has dropped 4 percent. The liquidity ratios are mixed but for the most part also good and the company has no debt, $288 million in cash and a total of $2.6 billion in cash/cash equivalents and investments so at the current $19 billion market cap they have 10% cash.
Here is a weekly chart with the $35.05 low from back in March of 2009.
If we were to go back even further there is support to the downside at 34.65 area in the weekly and at that point $RIMM might as well be done but fundamental and technical play this deserves a short term move to the upside so I will watch closely and might initiate a position on the long (BUY) side in the next 7 days. Already have a buy limit in at a lower price in case I sleep in or forget to check it for a few days.
Update: RIMM has Earnings on 6/16/2011 Afterhours