Research In Motion (RIMM) Looks Cheap Even For a "Dying" Brand
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Research In Motion (Nasdaq: RIMM) is getting crushed by 11 percent in after-hours action after Q1 guidance fell short of expectations.
Traders see RIM's BlackBerry as a dying brand in the US and see little hope for the PlayBook tablet. While this may be true, looking at the company on a simple valuation basis, the stock looks dirt cheap.
If RIM can earn the $7.50 this year as it claims, then the forward P/E multiple based on the after-hours price of $56 is 7.5x.
This is well below the market multiple of 15x. Also, comparing this to other "dying" or "struggling" brands RIM is still cheap.
GameStop (NYSE: GME) for example has a forward PE of 13x. Seagate (NYSE: STX) trades at 12x, SanDisk (NASDAQ: SNDK) at 10x. Cisco (Nasdaq: CSCO) at 11x and Microsoft (Nasdaq: MSFT) at 10x.
Maybe the most comparable is rival handset maker Nokia (NYSE: NOK), but even it trades at a forward multiple of around 12x.
RIM may still be a viable brand in some markets, but in the eyes of U.S. trader, the BlackBerry maker is ordering its last meal.
Traders see RIM's BlackBerry as a dying brand in the US and see little hope for the PlayBook tablet. While this may be true, looking at the company on a simple valuation basis, the stock looks dirt cheap.
If RIM can earn the $7.50 this year as it claims, then the forward P/E multiple based on the after-hours price of $56 is 7.5x.
This is well below the market multiple of 15x. Also, comparing this to other "dying" or "struggling" brands RIM is still cheap.
GameStop (NYSE: GME) for example has a forward PE of 13x. Seagate (NYSE: STX) trades at 12x, SanDisk (NASDAQ: SNDK) at 10x. Cisco (Nasdaq: CSCO) at 11x and Microsoft (Nasdaq: MSFT) at 10x.
Maybe the most comparable is rival handset maker Nokia (NYSE: NOK), but even it trades at a forward multiple of around 12x.
RIM may still be a viable brand in some markets, but in the eyes of U.S. trader, the BlackBerry maker is ordering its last meal.
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