RIM’s is Financially Sound and Earnings Are Very Attractive

13 Comments

RIM corporate

There are a lot of websites claiming RIM is dead and the BlackBerry is out. This isn’t the case when you look at the future device and OS roadmap and it’s especially not true when you look at the company’s financials. iStockAnalyst did a good breakdown of some key metrics. Highlights include:

  • For companies such as RIMM that maintain significant inventories, inventory to sales ratio is a key performance indicator. Inventory to sales for RIMM was 4.41 percent last year, while for this year it is 3.10 percent. Since inventory to sales has decreased from last year by -1.31 percent, RIMM’s inventory management seems to be good.
  • RIMM’s sales of $20.6 billion, based on trailing 12 month sales is higher than the sales for the year ended February 2011, which means demand for the company’s products is increasing (I think this is valid even when we consider price inflation). RIMM’s current ratio of 2.04 indicates that the company is managing its operations conservatively.
  • The long-term debt for RIMM is $0.0 million, while the net current assets are $4.1 billion, this indicates that the company’s financial position is very sound.
  • Currently, the company’s P/E of 4.11 relative to the growth rate of 51.23 percent, based on the average of the three, four and five year historical EPS growth rates, is very attractive.

Read more at “Should You Invest in Research in Motion” at iStockAnalyst.

  • James

    Wow, did you just read a Business 101 text book? What an amazing analysis!

  • http://pulse.yahoo.com/_NIYCXCBOK5QBBPA6XQQBSL4RJQ Rocmon

    @James – was that sarcasm?

  • http://pulse.yahoo.com/_NIYCXCBOK5QBBPA6XQQBSL4RJQ Rocmon

    @James – was that sarcasm?

  • Tncowman

    Thank you for some good news!  I am so tired of reading all the doom and gloom for RIM.  I know they are solid, but to read that someone else sees through the recent down turn is refreshing.
    RIM, I am waiting on new and better things from you!

  • Mark

    I agree James, a very informative article. Keep up the great work and razor sharp analysis. The little I remember from my courses at DeVry, inventory to sales was always a good canary in the mine for long term potential for a stock. Kudos!

  • James

    @Rocmon – yes, wasn’t I laying it on thick enough for you?

  • James

    @Rocmon – yes, wasn’t I laying it on thick enough for you?

  • Jose Demarco

    Has anyone looked as their Cash Conversion Ratio? I think the results might be very enlightening as far as understanding ability to launch new products and deliver the new Qnx operating system

  • Tony

    Give him a break. This is clearly a well intentioned counter
    point to the doom and gloom circling RIM. Speculation is driving RIM stock
    down, but the price of technical analysis like this is right.

  • James Mcgough

    I prefer my journalism to be a little more than well intentioned. Just because anyone CAN write about a subject on the Internet, doesn’t mean everyong SHOULD do so.

  • Adam S

    The price is wrong, bitch!

  • Tony

    James, I would take your own advice. The funny thing is, given your particular sensitivity to this posting, I would put money on the fact that you’re either an investor of RIM or a Canadian. And since we all know Canadian’s have nothing going for them except Mounties, Hockey (maybe not, what, too soon?), Gordon Lightfoot, and RIM, you have little else to be proud of. Why don’t you go boil some maple syrup for my hearty American pancakes you socialist prick..

  • James

    2 words: socialized medicine.