Darspal S Mann
Long/short equity, growth at reasonable price, special situations, deep value

DGIT: Growing Digital Revenues Have Finally Taken Over The Wheels. Get On Board.

Thesis

Digital Generation Inc. (NASDAQ:DGIT) is at the cusp of a new growth cycle, after years in a performance down cycle due to advertising shift from TV to online networks and it's core TV advertising distribution business going through price pressures. Declining revenues of its TV division are not overshadowing strong revenue growth of online division any more.

Stock can gain significantly, from current trading levels of 4 times EV/ EBITDA, with the growth of digital advertising market, better revenue contribution from High Definition TV division and de-leveraging of the balance sheet.

As per my estimate, the stock has potential to double even with just 4-5% of revenue growth and 3-4% of EBITDA growth with 1/3 of the...

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