iGo Inc (IGOI) Q1 Business Valuation Update

April 30, 2009 | Comments (3)

On April 29, iGo Inc (IGOI) announced earnings that were better than I expected considering they had previously lost their biggest customer, Targus. However, earnings wasn’t the number I was focusing on. It’s the assets I care about the most because this is a deep value stock investment.

For people new to iGo Inc, you can refer to the first stock analysis of this very interesting idea. The 10-Q hasn’t been filed on Edgar yet so I am basing my thoughts on the 8-K (the press release).

Quick View Business Valuation

igoi-q1-09

(click to enlarge)

With the latest numbers entered into the free net net investing spreadsheet above, the liquidation value of IGOI remains at $0.96. The close price today was $0.74 (ignore the $0.65 price on the image, it was created last night…) leaving a 23% discount to its liquidating price. With operations generating cash, the downside is very limited.

Brief Income Statement Analysis

  • Revenue and gross profit down from last year but this was expected and the numbers are not that bad.
  • SG&A far too high for my liking at 40% of revenues.
  • Didn’t receive any other income from litigation or from interest which is good. This way I can good indication of how profitable it can be.
  • If the other income is ignored from the 2008 income statement, the total net loss is very similar to this years result. Not bad considering everyone else is losing money down the drain.

Brief Balance Sheet Analysis

  • Increased cash: great
  • decrease in short term investments by about 50%. Either they lost it or converted it back to  cash for operations. (only bad point I see at the moment)
  • Accounts receivables slight increase.
  • Slight increase. Not by much so inventory management is steady.
  • Overall, a very slight decrease in assets due to the drop in short term investments.

Brief Statement of Cash Flows Analysis

  • The 10-Q isn’t available yet so no comment for now.

Overall, nothing alarming jumps out like the way other net nets burn through cash and the way the conference call went was also encouraging. It seems like management is planning some moves to try and increase shareholder value. I’ll have to listen to the conference call again to get a better indication of management trustoworthiness.

See the pdf below to compare the past 5 Q1 financial statements, excluding this quarter.

IGO Inc IOGI Q1 past 5 year quarterly statement Numbers


Summary

  • IGOI has done remarkably well considering the huge hurdle it faces in attracting new customers to overcome the Targus loss.
  • By valuing the assets of the business, the liquidation price still remains at $0.96. i.e. This is the minimum price it ought to be selling for.
  • Strong balance sheet
  • Cheap!

Disclosure

I own shares of IGOI at time of writing

About Jae Jun


Jae Jun is the founder of Old School Value. He is on a mission to provide practical and actionable value investing tools, tutorials and educational material to help empower the individual investor. Keep in touch with Jae via any of the methods linked below.

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