Is Polycom a Bargain Here?

With shares of Polycom (NASDAQ:PLCM) trading at around $10.05, is PLCM an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock’s Movement

We’ll take a look at the obvious news first. Then, we’ll delve deeper into the numbers and see if Polycom might present a good investing opportunity right now. As you might already know, Polycom has been downgraded to Hold from Buy at Stifel Nicolaus. The downgrade stems from the news that Sudhakar Ramakrishna will be leaving the company effective March 15. This move has led to speculation that there could be a problem with new products, as Sudhakar Ramakrishna is President of Products & Services. This might not be big news on its own, but four high-profile executives have left the company in the past year. This is rarely a good sign. Executives don’t leave a company if the atmosphere is good and the potential is high.

The good news is that Polycom is a leader in video collaboration. Therefore, there should be a lot of potential going forward. However, the numbers do paint an interesting picture. When you look at Polycom compared to Plantronics (NYSE:PLT), Polycom is weaker in almost every area. Polycom has significantly lower margins, a much lower ROE, and a substantially higher P/E at the moment. There is also a slightly higher short position on Polycom. However, it’s not all bad news for Polycom when it comes to numbers.

Let’s take a look at some more important numbers prior to forming an opinion on this stock…