A long time ago, in a high school far away, a good friend taught me a new word when he accused me of being "laconic." Upon grabbing a dictionary to find out just what the heck he was talking about (and whether I should be offended), I decided I liked it.
Derived from the Greek "Lakonikos," which refers to the Lacedaemon region of Greece from which the legendary Spartans hailed, the word is usually defined as "speaking with Spartan terseness."
What the heck are you talking about?
That's a roundabout way of giving military manufacturer Force Protection (Nasdaq: FRPT ) the following backhanded compliment. Appropriately for a member of the warrior caste, the firm released a laconic Q1 2007 earnings report. It contained neither cash flow statement, nor balance sheet, nor income statement -- just a bare four paragraphs of text, followed by a suggestion that investors go to the SEC's website for further details.
You see, Force Protection is what we call a "story stock." People who own it, love it. They love it for its mission: producing unique armored vehicles that seem impervious to Iraqi improvised explosive devices (IEDs). They love it for its prospects, including contracts in conjunction with firms like General Dynamics (NYSE: GD ) and Armor Holding (NYSE: AH ) to produce "Cougar" and "Buffalo" armored vehicles for the U.S. military, "Mastiffs" for Britain's warfighters, and potentially thousands of armored vehicles for the still-nascent Iraqi Defense Forces.
What they don't necessarily love it for, or even pay attention to, or demand that their company detail in its actual earnings releases, are the numbers that show how much money this investment is earning for them.
Those who want to look behind the story are kindly directed to the SEC's website for such picky little details. There, you'll find that, year over year:
- Force Protection grew its quarterly sales 188%, and its cost of goods sold 178%.
- It more than tripled its gross profit, as gross margin rose 280 basis points to 21.8%.
- Operating margin grew 220 basis points to 2.5% even as general and administrative costs rose nearly as fast as sales, and the firm septupled its spending on research and development.
- Insatiable demand for its products held inventory growth to a mere 62%, and accounts receivable growth to just 22%.
With a story as good as the one Force Protection tells, it seems investors are willing to take the company on faith, to accept its laconic press releases, and to not demand that it make it easier to find the numbers that prove their faith well-founded.
More's the pity. Because this story sounds even better in numbers than it does in words.
What are Fools saying about Force Protection? Find out on Motley Fool CAPS.
Fool contributor Rich Smith does not own shares of any company named above.
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