Why RealD Is Poised to Underperform

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 and see what CAPS investors are saying about the stock right now.

RealD facts

Headquarters (founded)

Beverly Hills, Calif. (2003)

Market Cap

$610.4 million

Industry

Electronic equipment and instruments

Trailing-12-Month Revenue

$220.2 million

Management

Co-Founder/Chairman/CEO Michael Lewis

COO/CFO Andrew Skarupa

Return on Equity (average, past 3 years)

(14.2%)

Cash/Debt

$27.7 million / $35.0 million

Competitors

Dolby Labs

IMAX

NVIDIA

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

On CAPS, 31% of the 85 members who have rated RealD believe the stock will underperform the S&P 500 going forward.

Just yesterday, one of those Fools, KarmaInvestor, succinctly summed up the RealD bear case for our community:

[RealD] is a fad with a very finite shelf life. They have no new innovation. About 70 % of their gross comes from overseas and that will fade as well once [C]hina and [R]ussia move onto the next new thing. The company's own buy back is manipulating the stock price higher -- nothing justifies the high P/E. [W]ith this, losses, over priced officers and no dividends why would this company ever increase substantially. [IMAX] much better value.

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10/22/2014 4:02 PM
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