On Feb. 1, data center equipment specialist Rackable Systems (Nsadaq: RACK) released full-year 2006 earnings for the period ended Dec. 30.
- Sales and profits grew at a respectable clip, but the bottom-line gains were negated by even bigger dilution. That's one of the side effects you have to endure when investing in small companies with a penchant for share-swap acquisitions.
- If the ROE drop looks impossibly steep, it's because average shareholder equity was nearly nothing in 2005. Return on the stated equity on the 2006 and 2005 balance sheets was 3.6% and 6.9%, respectively.
- Rackable Systems has a three-star rating in our Motley Fool CAPS investor database.
(Figures in thousands, except per-share data)
Income Statement Highlights
FY 2006 |
FY 2005 |
Change |
|
---|---|---|---|
Sales |
$360,376 |
$214,985 |
67.6% |
Net Profit |
$11,472 |
$8,512 |
34.8% |
EPS |
$0.40 |
$0.47 |
(14.9%) |
Diluted Shares |
28,618 |
18,040 |
58.6% |
Get back to basics with a look at the income statement.
Margin Checkup
FY 2006 |
FY 2005 |
Change* |
|
---|---|---|---|
Gross Margin |
21.4% |
23.1% |
(1.7) |
Operating Margin |
3.2% |
11.0% |
(7.8) |
Net Margin |
3.2% |
4.0% |
(0.8) |
Margins are the earnings engine. See how they work.
Management Effectiveness
FY 2006 |
FY 2005 |
Change* |
|
---|---|---|---|
Return on Assets |
15.7% |
29.3% |
(13.6) |
Return on Equity |
5.2% |
92.0% |
(86.7) |
See how management puts its financial tools to work.
Balance Sheet Highlights
Assets |
FY 2006 |
FY 2005 |
Change |
---|---|---|---|
Cash + ST Invest. |
$160,471 |
$54,164 |
196.3% |
Accounts Rec. |
$104,070 |
$49,700 |
109.4% |
Inventory |
$68,137 |
$40,649 |
67.6% |
Liabilities |
FY 2006 |
FY 2005 |
Change |
---|---|---|---|
Accounts Payable |
$61,102 |
$28,226 |
116.5% |
Long-Term Debt |
$0.0 |
$0.0 |
N/A |
Learn the ways of the balance sheet.
Cash Flow Highlights
FY 2006 |
FY 2005 |
Change |
|
---|---|---|---|
Cash From Ops. |
($17,584) |
($28,384) |
38.0% |
Capital Expenditures |
$3,938 |
$1,801 |
118.7% |
Free Cash Flow |
($21,522) |
($30,185) |
28.7% |
$13,940 |
$14,829 |
(6.0%) |
Find out why Fools always follow the money.
Cash Conversion Checkup
FY 2006 |
FY 2005 |
Change |
|
---|---|---|---|
Days in Inventory |
70.1 |
61.9 |
8.1 |
Days in Receivables |
77.9 |
50.1 |
27.7 |
Days Payables Outstanding |
57.5 |
43.1 |
14.4 |
Cash Conversion Cycle |
90.4 |
68.9 |
21.5 |
Read up on cash conversion metrics.
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Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean.
At the time of publication, Anders Bylund had no position in any company mentioned. Fool rules are here.