Daily Value Idea 04/12/14 , Micro Cap

LeapFrog Enterprises Inc. (LF): LeapFrog Enterprises designs, develops, and markets technology-based learning products and related proprietary content for children worldwide.

It’s easy to make a case against LeapFrog, mostly cheaper alternatives. Yet, the current price could present a strong opportunity.My quick check on Amazon shows 5 and 4 star reviews for their toys.LF has many number 1 products for child learning. number 1 or highly rated products such as LeapPad learning tablet, Leapster, learning game systems, along with learning toys, and educational videos.Amazon customers gave 4 and 5 star ratings for their large line of products. 

I will rely on financial numbers to make the case to investigate further.

Why investigate: Trading at 2 years lows for price and valuation based on book or sales. The stock has attracted value institutions to recently add to their existing position, Royce and Killen group.Tangible value based evidence for LF ;Price = $6.88…. assets supporting the price are total current assets of $5.72, cash per share of $2.45 and total assets of $7.47 per share, book value $6.17

High quality company based on an annual ROIC average from 2011 to TTM  of 21.05%. In addition it’s cheap based on book value of 6.17 with 2.42 per share in cash versus the current price of 6.88. The stock is pennies away from its 52 week low of 6.10, off 44% from 52 week high. Leap Frog would qualify as a Greenblatt magic stock,"cheap" based on EV/EBIT and "good" high ROIC. EV/EBITDA is 6.78 and ROIC of 22.19%. LF is trading at a discount to intrinsic value.  Why, just based on the book value of 6.17 coupled with high earnings yield, trailing P/E of 6.78,no debt and cash per share of 2.42, total current assets of 5.71.

Market Cap: 478.11M , Enterprise Value: 321.88M
Trailing P/E: 5.78
Price/Sales:0.87 , Price/Book:1.13
Enterprise Value/Revenue: 0.58 , Enterprise Value/EBITDA: 6.78
Profit Margin:  15.18% , Operating Margin: 6.31%
Revenue:  553.61M
Qtrly Revenue Growth (yoy):-23.70%
Gross Profi: 216.05M , EBITDA:  47.45M
Total Cash: 168.05M , Total Cash Per Share:  2.42
Current Ratio:4.98 ,Book Value Per Share: 6.17
52-Week Change: -16.00%
52-Week High (Aug 1, 2013): 11.95 ,52-Week Low : 6.10
% Held by Insiders: 14.89% , Short % of Float: 24.10%