On Wednesday, Motley Fool Rule Breakers pick Secure Computing
- At first blush, earnings looked awful. And yet the opposite is true. After one-time items and after backing out the effects of the CipherTrust acquisition, which occurred during the quarter, Secure Computing earned $0.10 a share on $42.5 million in sales, both of which beat expectations.
- What's more, Secure's balance sheet inherited only $89 million in debt. That's an impressive discount from the $115 million management had expected to take on to finance the CipherTrust deal, and suggests high confidence in the firm's ability to produce excellent cash flow.
- Guidance according to generally accepted accounting principles suggests further losses during Q4, but it's likely the next quarter will also see more one-time charges due to the CipherTrust deal. Keep a closer eye on cash flow, Fool.
(Figures in thousands, except per-share data)
Income Statement Highlights
Q3 2006 |
Q3 2005 |
Change |
|
---|---|---|---|
Sales |
$43,748 |
$27,249 |
60.5% |
Net Profit |
($8,194) |
$5,792 |
N/A |
EPS |
($0.14) |
$0.15 |
N/A |
Diluted Shares |
57,378 |
38,182 |
50.3% |
Get back to basics with a look at the income statement.
Margin Checkup
Q3 2006 |
Q3 2005 |
Change* |
|
---|---|---|---|
Gross Margin |
73.06% |
81.53% |
(8.47) |
Operating Margin |
(14.51%) |
19.83% |
(34.34) |
Net Margin |
(18.73%) |
21.26% |
(39.99) |
Margins are the earnings engine. See how they work.
Balance Sheet Highlights
Assets |
Q3 2006 |
Q3 2005 |
Change |
---|---|---|---|
Cash + ST Invest. |
$8,370 |
$72,644 |
(88.5%) |
Accounts Rec. |
$51,733 |
$23,881 |
116.6% |
Inventory |
$4,533 |
$2,553 |
77.6% |
Liabilities |
Q3 2006 |
Q3 2005 |
Change |
---|---|---|---|
Accounts Payable |
$13,628 |
$1,738 |
684.1% |
Total Debt |
$88,905 |
$0 |
N/A |
Learn the ways of the balance sheet.
Cash Flow Checkup
Q3 2006 |
Q3 2005 |
Change |
|
---|---|---|---|
Cash From Ops. |
$26,008 |
$18,780 |
38.5% |
Capital Expenditures |
$8,368 |
$1,737 |
381.8% |
Free Cash Flow |
$17,640 |
$17,043 |
3.5% |
Find out why Fools always follow the money.
Related Companies:
-
EMC
(NYSE:EMC) -
McAfee
(NYSE:MFE) -
Symantec
(NASDAQ:SYMC) -
Websense
(NASDAQ:WBSN)
Related Foolishness:
Secure Computing is one of dozens in a Rule Breakers portfolio that features five stocks that have more than doubled in price. Want to find out who they are? Click here to get 30 days of free access to the service.
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.
Fool contributor Tim Beyers owns shares of Secure Computing. You can find out which other stocks he owns by checking Tim's Fool profile. Symantec is a Motley Fool Inside Value selection. The Motley Fool's disclosure policy always adds up.