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 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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The article Why RealD Is Poised to Underperform originally appeared on Fool.com.

Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool recommends Dolby Laboratories, IMAX, and NVIDIA. The Motley Fool owns shares of IMAX. 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.

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