Research In Motion: Fundamental Breakdown

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 |  About: BlackBerry Ltd. (BBRY), Includes: AAPL
by: Mayo Welch

Research In Motion (RIMM) may be bought out soon. Although it is being thrashed in the market, Research In Motion is still a profitable company and deserves a second look. The fundamentals of the company are rock solid at $27.75.

Book Value

RIMM is trading at roughly two times its book value, making it slightly less expensive than its peers who trade at roughly three times their book value. Now going beyond the book value, analysts are saying the company is too outdated. The BlackBerry phones and operating system have failed to match that of the Apple (AAPL) Store and Android Marketplace. The metrics tell a different story.

Price to Sales

RIMM is trading at a remarkable discount -- less than 1 times its sales. Essentially meaning you stand to gain roughly $0.30 per share. While I don't like RIMM for the long-term, the short-term looks as though RIMM may rebound but only a little. It is oversold at the moment with an indicator that it shouldn't be.

Operating Margin

RIMM is currently sitting at an operating margin of 21.66%. So, it is earning $00.21 for every dollar used. This isn't remarkable, but it isn't insulting neither. It just shows that the company is running smoothly unlike other companies that are pulling a sad 0.5% operating margin.

Now the operating margin is not impressive, but when coupled with the management ratios it makes one wonder why RIMM has not been approached.

Return on Assets

RIMM is currently generating 27.21% return compared to their peers' 15.49%. RIMM is able to outperform its peers by 11.72%.

Return on Equity

RIMM generates 37.82% or $0.37 per dollar invested in the company. This is roughly $00.06 higher than RIMM's peers.

Return on Investments

RIMM is at 37% and when compared to its peers' ROI of 21.09%, it is clear to see that RIMM is very good at investing.

RIMM is failing due to a lack of innovation, not management, but the management is in a rock and a hard place. Some analysts believe that RIMM is shifting from BlackBerry phones to tablet PCs. This is comparable to Apple transitioning from a Mac focus to an I-product focus. If memory serves, Apple shares took a beating in 2009 when that was announced.

If that really is the case, the transition really couldn't come at a better time. The one thing working in RIMM's favor is that it doesn't really have an intellectual property that warrants a buyout, but as soon as they announce that they have something they will be a target for a takeover.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.