RRSat Global Communications Network Ltd. (NASDAQ:RRST)

Nestorvestor (< 20) Submitted: 12/16/2010 8:39:22 AM : Start Price: $6.47 RRST Score: -36.86

What drew me to RRSat are the cold financial fiqures. Order book of 170m on revenues of 100m gives some safety as does the price to tangible book ratio of 1.5. Revenues have been growing 20% a year and the ROE has been sailing between 11%-15% and ROA between 8%-13%. Dividend yield is over 3% and 70% of stock is owned by insiders (Two investment firms. Kardan N.V & InterGamma Investment) so this could propably be a buyout candidate also.While 2010 wasn´t a great year for them in terms of growing EPS or FCF, they have been growing their revenues and book to bill ratio. I think they are nicely positioned to benefit from the growing consumer demand of HD broadcasts and digital content in general. Their geographical position in Israel is ideal as it is a newsrich area and global companies are in need of their equipment near the hotspots. Being close to the emerging markets of Africa & Pacific Asia isn´t a bad thing either.I think a fair value would be 10$. That would mean 2x tangible book, forward P/E of 15, PEG ratio of 1 and thats the same number that i get from the DCF analysis using a discount of 12%, growth of 10% for 10 years and a terminal rate of 2%. Pretty conservative estimates that leave a margin of safety of 30%. Full article:http://nestortheinvestor.blogspot.com/2010/12/rrsat-consumer-play-disguised-as-tech.html