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Subject:  RST? Date:  3/15/2011  1:30 PM
Author:  VTDave Number:  272 of 1287

Hi Jim,

Much has been written about RST already on the SA boards, and I'm still not sure if I have confidence in the management team. But if one can find confidence there, then I think RST may qualify as a MUE.

Current price: $13.06
Disc: 15%
4Q Wt. Avg. Dil. Shares: 21.3M
1-5 growth assumption: 3.9%
6-10 growth assumption: 1.95%
Terminal: 0%

Historically, their TTM FCF has looked like the following:

4Q10 23.5M (28.3%)
3Q10 34.5M 187.5%
2Q10 32.0M 48.8%
1Q10 37.3M 174.3%
4Q09 32.7M 189.4%
3Q09 12.0M
2Q09 21.5M
1Q09 13.6M
4Q08 11.3M

So clearly, the market is reacting to the 4Q earnings and FCF numbers, but the question is will management be able to turn that around? I don't think that RST's problems are over, but should they correct their issues in the US market, this could be a profitable trade over time. I'm hard pressed to see them growing at the rates the market is assuming for years ahead. Then again, it's not your least risky MUE candidate....


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