Prior to Leaving My Old Firm, I had The Rubicon Project (RUBI) Under Due Diligence for an Upgrade. Here is Why:

• Valuation trading below the peer group RUBI shares were cheap on an EV/ Sales, EV/EBITDA and even P/E basis provided revenue growth was still possible.

 

• RUBI trades at under 1x revenue which compares to peers 1.9x.

 

• RUBI trades at 17x EPS on a TTM basis which compares to peers 28x.

 

• RUBI trades at 4x EV/Ebitda  which compares to peers to peers about 13x

 

• We like RUBI’s new CPE officer Tom Kershaw who RUBI hired from Google and who has been positioning the company to take advantage of growth in mobile and video advertising as it rolls out a header bidding platform.

 

• We think RUBI lost its way a little bit in 2016 following the acquisition of Chango and now is on track to take advantage of core strategic strengths.

 

• RUBI largest independently owned Ad exchange and it does more than intermediate. RUBI is really an AD cloud driven by an AI network. As an exchange it handles about a trillion or more transactions a day which is multiples more than the NASDAQ stock exchange and handles these transaction with low latency in our belief.

 

• Thus RUBI in my view is an impressive strategic asset trading at a low price that would justify a Buy in any case.

 

• While the shares are trading up 11% today I suspect there is an additional 50% upside to the $12 to $15 range as it would still be trading under the peer multiple in most cases and because RUBI is still at the low end of the $6 to $21 52 range.

 

I really did not want to write on this as I am just starting to develop a new research web portal: tenxresearch.com but what the heck, so please excuse the appearance while its under construction.

 

Company Comp Set
Company Name	TEV/Total Revenues LTM – Latest	TEV/EBITDA LTM – Latest	TEV/EBIT LTM – Latest	P/Diluted EPS Before Extra LTM – Latest	P/TangBV LTM – Latest
Omnicom Group Inc. (NYSE:OMC)	1.6x	10.5x	12.0x	18.3x	NM
The Interpublic Group of Companies, Inc. (NYSE:IPG)	1.4x	9.9x	11.6x	17.7x	NM
WPP plc (LSE:WPP)	2.2x	14.7x	18.4x	29.3x	NM
Varonis Systems, Inc. (NasdaqGS:VRNS)	4.1x	NM	NM	NM	9.7x
Tremor Video, Inc. (NYSE:TRMR)	0.5x	NM	NM	NM	2.0x
YuMe, Inc. (NYSE:YUME)	0.4x	NM	NM	NM	1.4x
Rocket Fuel Inc. (NasdaqGS:FUEL)	0.2x	NM	NM	NM	1.6x
Criteo S.A. (NasdaqGS:CRTO)	1.5x	16.0x	23.8x	35.8x	5.5x
Forrester Research Inc. (NasdaqGS:FORR)	1.9x	17.7x	23.4x	55.1x	11.4x
Publicis Groupe S.A. (ENXTPA:PUB)	1.8x	9.7x	11.1x	16.0x	NM
MDC Partners Inc. (NasdaqGS:MDCA)	1.1x	10.2x	15.4x	NM	NM
The Trade Desk, Inc. (NasdaqGM:TTD)	6.1x	19.8x	20.6x	NM	7.8x
The Rubicon Project, Inc. (NYSE:RUBI)	0.6x	3.9x	10.2x	17.2x	1.9x
Summary Statistics	TEV/Total Revenues LTM – Latest	TEV/EBITDA LTM – Latest	TEV/EBIT LTM – Latest	P/Diluted EPS Before Extra LTM – Latest	P/TangBV LTM – Latest
High	6.1x	19.8x	23.8x	55.1x	11.4x
Low	0.2x	9.7x	11.1x	16.0x	1.4x
Mean	1.9x	13.6x	17.0x	28.7x	5.6x
Median	1.5x	12.6x	16.9x	23.8x	5.5x
S&P 500 (^SPX)	2.3x	11.8x	17.4x	25.9x	7.9x

Source: Tenxresearch.com with data from Capital IQ.