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Rofin-Sinar, a Cheap Tech Name or Value Trap?

Stocks in this article: RSTI

NEW YORK (TheStreet) -- The drought in availability of cheap stocks is man-made as investors continue bidding up valuations. But there are still value stocks to be found, such as Rofin-Sinar Technologies (RSTI) trading recently at $23.18.

The laser-solutions company is trading inexpensively relative to its net current assets value. The new double net -- trading at between one and two times its NCAV -- is certainly not a well-known name. Rofin-Sinar has significant operations in Germany, and remained profitable through the last recession.

On the negative side, Rofin-Sinar's revenue stagnated in recent years, falling from $598 million in 2011, to $540 million in 2012, and recovering somewhat to $560 million this past year. Its first quarter results for 2014 showed a 15% revenue decline. Profit margins have been declining as well. The company bottom-lined 10.1% of revenue in 2011; that fell to 6.2% in 2013.

RSTI Revenue (TTM) ChartRSTI Revenue (TTM) data by YCharts

While that may not paint a rosy picture for this cyclical company, it is also the reason that the company currently trades at just 1.98 times NCAV, and less than 1.2 times book value per share. The balance sheet is solid, and the company ended its latest quarter with $145 million or $5.13 per share in cash and short-term marketable securities, and just $19 million in total debt.

RSTI Chart
RSTI data by YCharts

A deeper examination of the 10K filing reveals Rofin-Sinar owns the land and buildings for five of its manufacturing facilities in New Jersey, Florida, Finland, Spain and China, for a total of 194,000 square feet of space. In addition, it owns a 175,000 square foot facility in Hamburg, Germany, on leased land.

Time will tell whether Rofin-Sinar is a true bargain, or just another technology company in decline, but it's good to have another double net on the radar for further scrutiny.

At the time of publication the author is long LF.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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