1-Star Stocks Poised to Plunge: RealD?

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, 3-D movie technologist RealD (NYSE: RLD  ) has received the dreaded one-star ranking.

With that in mind, let's take a closer look at RealD's business and see what CAPS investors are saying about the stock right now.

RealD facts

Headquarters (Founded) Beverly Hills, Calif. (2003)
Market Cap $481.6 million
Industry Movie production
Trailing-12-Month Revenue $263.8 million
Management Co-Founder/Chairman/CEO Michael Lewis
COO/CFO Andrew Skarupa
Trailing-12-Month Return on Equity 10.6%
Cash/Debt $32.5 million / $25.0 million
Competitors Dolby Labs
IMAX
NVIDIA

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 33% of the 83 members who have rated RealD in believe the stock will underperform the S&P 500 going forward.

Earlier this week, one of those Fools, All-Star kkconway, explains why RealD's upside is limited:

Most 3-D content is pedestrian and poor (i.e., they are still poking objects out of the picture plane, into the face of the audience; I've seen that in 50s movies, thanks anyway. There will never be enough Avatars to make a market for this gimmick. "Hugo" was a great movie I saw in 2D in December. I read that the 3-D version had issues, so I felt justified to go to a closer showing in dinosaur mode. If the inimitable Martin Scorcese can't make 3-D work, the industry is doomed.

What do you think about RealD, or any other stock for that matter? If you want to retire rich, you need to protect your portfolio from any undue risk. Staying away from dangerous stocks is crucial to securing your financial future, and on Motley Fool CAPS, thousands of investors are working every day to flag them. CAPS is 100% free, so get started!

Want to see how well (or not so well) the stocks in this series are performing? Follow the new TrackPoisedTo CAPS account.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Motley Fool newsletter services have recommended buying shares of NVIDIA, Dolby Laboratories, and IMAX. Motley Fool newsletter services have also recommended writing puts in NVIDIA. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (2) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 12, 2012, at 12:59 PM, bbflyer wrote:

    Brian,

    Your only reasoning why RealD's upside is limited is based on one Fool's, kkconway, uninformed opinion about a movie, Hugo, that he didn't even see in 3D? What's even worse is that he is misrepresenting reality in that Hugo was well received by the audience in 3D. According to Boxofficemojo.com 75% of the grosses were in 3D and it has 94% rating on rotten tomatoes. Even Roger Ebert, a real film critic who has been very much against 3D, believed the technology added to the experience: "Not long ago, I saw a 3-D children's film about penguins. I thought it was a simpleminded use of the medium. Scorsese uses 3-D here as it should be used, not as a gimmick but as an enhancement of the total effect." Taken from:http://www.rogerebert.com/apps/pbcs.dll/article?AID=/2011112...

    Before Fool investors listen to this Fool I suggest you look beyond one person's emotional thesis and do some research for yourself. A quick glance at the top critics on Rottentomatoes.com will show that they overwhelmingly favored the use of 3D in Hugo. Same with TinTin and opening weekend 74% of the grosses were in 3D according to BoxofficeMojo.com.

    You may not like or appreciate 3D yourself but audiences have been flocking towards the medium. 6 out of the top 10 grossing movies of all time are in 3D and were the last 6 to enter the top 10 and make over $1 billion worldwide. 3 out of the top 5 and 6 out of the top 10 domestic movies were in 3D this year including #1 and #2 (Harry Potter and Transformers). Another interesting data point - Paramount was the #1 studio this year, according to Boxofficemojo.com, and all of their top 5 grossing movies were in 3D.

    Considering that the 3D film slate is increasing this year and the technology is continuing to get better and better with higher frame rates, etc. I wouldn't bet against RLD with it's 80-90% domestic share and over 17,000 screens globally. Oh yeah, in China, the box-office grew at over 30% in 2011 and 40% was in 3D. RealD has strong presence in China. Also keep in mind that RLD is profitable and printing money - $105MM TTM EBIDTA.

  • Report this Comment On January 13, 2012, at 8:03 AM, okmnji wrote:

    Its clear that the Fool has no idea as to the actual internal growth and acceptance of this company as explained by bbflyer's post above. Its also clear that this guys agenda is to bash the stock as to make a profit, because he has a vested interest in the stock going down.

    How about we ask the Fool that writes these pieces to show us his portfolio and see exactly what type of agenda this Fool (no, idiot) really has.

    At the end of the day, no one really listens to this guy. The only reason anyone reads his stuff is because somehow, yahoo news believes they should post it. That is it. Otherwise no one, except the sheep would be reading this.

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