Digital Generation Inc Com (NASDAQ:DGIT)

Advanced Quantitative Momentum Arbitrage (AQMA)
(black box)

Yes!

Returns on investments/assets a little low for my tastes, however I still see this one as a winner. Working captial represents 36% of market cap, so we have a very liquid company poised for high growth at an estimated 22% eps growth over the next 3-5 years. DGIT is undervalued with its growth rate as it sports an attractive .51 PEG.

Growth stock on sale at trailing P/E of 11.4, EV/EBITDA of 6.3. Revenue run-rate is looking to be around 20% y-o-y (avg of last 4 quarters) or 36% if based on 9/30/11 quarterly revenue.

However, margins look to be hurting as EBITDA has declined due to some recent acquisitions. Still, this is a small cap I'm willing to bet on in a growth industry.

Magic Formula stats:

Results for ticker 'DGIT' (DG FastChannel, Inc.):
Earnings Yield:   10.1%
MFI Return on Capital:   50.0%

MagicDiligence Research for 'DGIT':

No research available.

Instant Diligence:

The Earnings Yield of 10.1% is High.

The MFI Return on Capital of 50.0% is High.

Near-term Financial Health appears to be Excellent. The current ratio is 3.11.

Calculations:

(for quarter ended 2011-09-30)
Market Cap   =   Stock_Price * Shares
   =   14.39 * 27.49
   =   395.00

Excess Cash   =   Cash - MAX(0; (Current Liabilities - Current Assets + Cash))
   =   72.45 - MAX(0; (59.56 - 185.30 + 72.45))
   =   72.45

Enterprise Value   =   Market Cap + Total Debt - Excess Cash
   =   395.00 + 484.04 - 72.45
   =   806.59

MFI Invested Capital   =   Total Assets - Goodwill - Intangibles - Current Liabilities + Short Term Debt - Excess Cash
   =   1102.97 - 494.02 - 319.64 - 59.56 + 4.90 - 72.45
   =   162.20

Earnings Yield   =   Operating Earnings / Enterprise Value
   =   81.10 / 806.59
   =   0.101 (10.1%)

MFI Return on Capital   =   Operating Earnings / MFI Invested Capital
   =   81.10 / 162.20
   =   0.500 (50.0%)

PEG Ratio (5 yr expected)1: 0.82
Profit Margin (ttm): 16.12%
Operating Margin (ttm): 31.04%

TV is a promising hub for consumer electronics.
Marketing will be performed via TV media, which indicates a great opportunity awaits DGIT.

Blue Horseshoe Loves DG FastChannel, Inc.

Will the class action lawsuit have an impact on the stock value?

Market over-reacted to the downside and Price to Book value looks good.

sell-off overdone

target $40

This is a great entry point for a quality company growing at a 20-40% clip with almost no competition.

The stock has sold off from its high in the forties. Why did it sell off?

1. The company announced that it would miss on the analyst estimates for Q3 and end of year revenues and earnings. Note that revenues are still expected to climb 20% and EBITDA at 40% on the year.

2. The CEO and found sold off about 1/3 of his stake in the company.

3. The company sold around $100 million worth of stock to pay off its long term debt and to build up a cash hoard.

4. This is pure speculation, but I wonder if a lot of future growth was perhaps anticipated from its partnership with Google TV. And Google TV seems to have struck out last month when they made the rounds around the Hollywood studios and content creators seemed to universally dismiss its overtures to try to push out the middle-men (content deliverers) in favor of Google with higher revenues in the form of targeted advertising. (Don't be evil. Eat cookies!!)

But DGIT is still sitting pretty. They are still growing insanely fast. They still have none or almost no competition. They still have an old media radio and tv business that will continue to grow into the future. Also as the only game in town they should be able to extract greater profits from their existing market share.

following bravo and vanamonde

DG FastChannel...oh how the mighty have risen and fallen all within the last two years. DGIT would not have been one of my first choices for a long about two weeks ago - in fact it was a possible short trading at some very lofty levels. Now, trading at about 9 times 2011's profit projections, about 0.9 times book value and with $2.80 in net cash per share I think you're getting yourself a nice value. DGIT is going to grow at 18% per year for the next five years and although pricing pressures will always beat down the advertising sector, I just don't see how you can't be expecting a quick bounce here over the next few days/weeks. Make no mistake this is a shorter-term pick and although the fundamentals back up the rebound, I'm not convinced they won't deserve this valuation in say a year or two. My 2 week to 2 month target is in the $17-18 range and I'll be looking to nab DGIT at $14.72 as a limit buy.

UltraLong

No outstanding debt. Margins increasing dramatically. DGIT is about to become a cash cow.

One of the top 5 fastest growing companies in 2009

I co-founded DGIT in 1991 and have been watching its business model develop over it life. DGIT's addressable business opportunities are very large and significant. It has well-positioned itself for rapid revenue growth and is a beneficiary of awesome economies of scale. Good management execution on business plan. Watch its net profits soar over the next year!

This is a seasoned management team that knows how to build earnings and worth.

functional monopoly on digital ad distribution, and moving into internet. I'm sorry, are we going to go back to shipping vhs' around the country?