Red Lion Hotels Corp (RLH)

HatchingPlans (99.79) Submitted: 5/30/08 5:13 PM : Start Price: $8.70 RLH Score: -26.98

This company's financials don't look half bad...

-The most promising stuff:
Operating Cash Flow / Market Cap = 14.5% and I like to shoot for 10% or more. This means if you were to buy the company for full price right now, you would make a 14.5% return on your investment (OCF isn't perfect for this, but it gives a good idea here)...

Trailing --> Forward P/E is creating a nice trend of 47 --> 23.5, or basically it's getting cut in half. Also, getting in at $8.92 per share with a book value per share of $9.80 means that the physical company is actually worth a bit more than you pay for the share price... Nice.

Also, I really like hidden gems that nobody else has really found and backed up yet. Generally this means you can get in at the bottom of the potential curve. Finding this out before others is generally a good thing (if a little bit riskier)...

-Concerns and setbacks:
Debt is a little high, but with this much disposable income for the size of the company, it's not an awful thing here. They'd be able to pay it off when they're ready, and it doesn't look like it's burning a hole in their pocket. Also keep in mind the sector here... Generally to own any kind of real estate (in this case borrowing a hotel building from the bank and renting out rooms) you will need to acquire debt to get on your feet. This is ok...

Especially since real estate has been beaten down so much, there are a lot of cheap deals for buyers. If they plan on expanding (which their financials indicate they are ready to) they will be in a great place to do so. The main concern here is loss of current holdings value as real estate continues to plummet. So growth would mean good things for these guys, while stagnation would be very bad.

All in all, the company looks decent. 4 out of 5 stars.

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