Market analysis website Seeking Alpha has an interesting article up on RIM’s stock price and whether it’s a reflection of their actual value. Because of RIM’s recent stock drop, it would seem to make sense that now would be a good time to buy in. However, Seeking Alpha contests that RIM’s share price might still be overvalued.
Projecting a best-case-scenario cash flow growth rate for RIM (20% in the next four years, 15% by year ten), Seeking Alpha states that this generates a share valuation of $66.22, which is close to where RIM’s share sits right now.
In other words, RIM’s stock is almost priced for best-case scenario growth. For those who believe that RIM can grow its free cash flows at 20% per year for the next five years and at double digits for five more years after that, there might be tad more value left in the shares. I have my doubts.