Is Pandora Immortal?

February 25, 2013

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E = Equity to Debt Ratio Is Strong

The debt-to-equity ratio and balance sheet for Pandora are strong. This is an important factor. If the balance sheet remains strong and Pandora continues to creep toward profitability, then it will have potential as an acquisition target. On the other hand, bigger players in the market are choosing to compete with Pandora opposed to acquiring it.

	Debt-To-Equity	Cash	Long-Term Debt
P	0.00	$80.50 Million	$0
SIRI	0.60	$520.94 Million	$2.44 Billion
AAPL	0.00	$39.82 Billion	$0

T = Technicals on the Stock Chart Are Mixed

Pandora has performed well year-to-date. Over that timeframe, it has outperformed Sirius XM Radio and Apple. However, Pandora is down since its IPO. Of the three companies listed here, only Apple offers yield, which is currently 2.30 percent.

	1 Month	Year-To-Date	1 Year	3 Year
P	9.30%	31.92%	-5.98%	N/A
SIRI	-1.29%	5.54%	41.18%	182.40%
AAPL	0.65%	-14.80%	-12.43%	128.00%

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At $12.11, Pandora is currently trading above all its averages.

50-Day SMA	10.63
100-Day SMA	9.71
200-Day SMA	10.03

E = Earnings Have Been Improving

There are two ways to look at this situation. The optimistic viewpoint is that earnings have been improving and seem to be heading toward positive territory. The pessimistic viewpoint is that the company is still losing money, and there is no guarantee that earnings will continue to improve.

	2008	2009	2010	2011	2012
Revenue ($)in millions	N/A	19.33	55.19	137.76	274.34
Diluted EPS ($)	N/A	-5.45	-3.84	-1.03	-0.19

When we look at the last quarter on a year-over-year basis, we see a significant increase in revenue and a slight increase in earnings.

	10/2011	1/2012	4/2012	7/2012	10/2012
Revenue ($)in millions	75.01	81.33	80.78	101.27	120.00
Diluted EPS ($)	0.00	0.46	-0.12	-0.03	0.01

Now let’s take a look at the next page for the Conclusion. Is this stock an OUTPERFORM, a WAIT AND SEE, or a STAY AWAY?

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