Hey Longs,
Just got my RACN annual report. Pretty slick piece of marketing, which is what this biz is all about. A couple of things that stand out to me were the demonstrated growth in sales/revenues and the high margins. Also, seems to be a diversified product line, which ERTL will only further help. Another key advantage is the development of the RIZ manufacturing facility in China....now up and running, and the cost savings and efficiencies should start to hit the bottom line soon. All these things, plus relative cheap valuation, leads me to believe that this should trade higher. This is not a fast moving high flier, but management seems to have a plan and they are executing. High teens or 20s might be in reach this year.
On the negative side, narry a word about ERTL in the annual report (at least the marketing section of the report), and they really soft sell their I-net distribution. In my opinion they should really do more with the direct distribution model, which only makes up 4% of sales, but I guess they are afraid to jeopardize their relationships with their retail channels. IMHO their is room for both, and lots of upside with the direct model. Might also be an attractive acquisition for another company.
good luck all,
Minos
|
