RTK Investment Analysis Report & Stock Research, Rentech, Inc.

Ockham's Rating/Recommendation Summary

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RTK Revenue

Cash earnings is the most important factor in our analysis, but it goes without saying that if a company cannot produce sales then there is no ability to generate cash flow. By that logic we look very closely at revenue numbers as our second most important factor in valuing a company's stock. We have established reasonable Price to Sales per share ranges based on historical data of the last 10 years. For, RTK the high and low end of the Price to Sales per share ratios are 15.84x and 5.14x respectively.

Notice that RTK's current Price to Sales per share ratio is 1.29x, which is quite a bit below what we consider a normal Price to Sales ratio for this stock. Given normal conditions and a price of $1.11, RTK is 88% below where we would expect to see it. This will beneficially factor into our final analysis of RTK as it is not often that this stock sinks to these levels.

RTK Cash Earnings

When there is not enough positive Cash Earnings history available for a company, we at Ockham Research can find it quite difficult to actually rate their ability to generate cash. Such is the case with RTK. When a company has current positive cash earnings but not enough years of history to compare it to, we find the correlation of cash earnings to valuation significantly hindered. So with RTK, we will have to wait to see if there are a few more cycles of positive Cash Earnings numbers before we will be confident in our Cash Earnings analysis.

RTK Dividends

A positive Ockham rating does not require a company to pay out an inviting dividend or a dividend at all. However, we believe dividends provide a useful measure of a company's inherent expectations. While we do like to see companies with healthy and growing dividends, it is not appropriate for all companies, especially those focused on growth. In this regard, we regard RTK as neutral because we do not have historical data for this company's dividends. We will being incorporating this into our analysis as soon as that data is available.