Headwaters' Uncertain Heading: Fool by Numbers

On Nov. 7, Motley Fool Rule Breakers pick Headwaters (NYSE: HW  ) released full-year 2006 earnings for the period ending Sept. 30, 2006.

  • As with the fourth-quarter results, investors saw better-than-expected earnings mixed with disappointing sales.
  • Nevertheless, management was reasonably upbeat with guidance, suggesting that 2007 earnings could come in between $1.60 to $1.80 per diluted share, and perhaps significantly higher than that if oil prices continue to trend lower.
  • Synfuel continues to account for a huge portion of Headwaters' earnings and, thereby, cash flow -- 73% of it, according to data included in the full-year report.
  • Headwaters carries a three-star rating in Motley Fool CAPS. Why not give your call on the stock?

(Figures in thousands, except per-share data)

Income Statement Highlights

Avg. Est.

FY 2006

FY 2005

Change

Sales

$1,130, 000

$1,121,387

$1,064,639

5.3%

Net Profit

--

$102,058

$121,278

(15.8%)

EPS

$2.06

$2.79

$2.19

27.4%

Diluted Shares

--

45,083

48,602

(7.2%)



Get back to basics with a look at the income statement.

Margin Checkup

FY 2006

FY 2005

Change*

Gross Margin

31.88%

36.73%

(4.85)

Operating Margin

16.21%

22.25%

(6.04)

Net Margin

9.10%

11.39%

(2.29)

*Expressed in percentage points.

Margins are the earnings engine. See how they work.

Balance Sheet Highlights

Assets

FY 2006

FY 2005

Change

Cash + ST Invest.

$79,151

$13,666

479.2%

Accounts Rec.

$131,608

$174,127

(24.4%)

Inventory

$62,519

$60,519

3.3%



Liabilities

FY 2006

FY 2005

Change

Accounts Payable

$23,854

$43,857

(45.6%)

Long-Term Debt

$587,820

$601,811

(2.3%)

Learn the ways of the balance sheet.

Cash Flow Checkup
No cash flow statement provided. (Whatever.)

Find out why Fools always follow the money.

Related Companies:

  • Arch Coal (NYSE: ACI  )
  • Alliance Resource Partners (Nasdaq: ARLP  )
  • Cemex (NYSE: CX  )
  • Foundation Coal (NYSE: FCL  )
  • Lafarge North America (NYSE: LR  )
  • Nalco (NYSE: NLC  )

Related Foolishness:

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 checkFool.com for more of our in-depth discussion of what the numbers mean.

Headwaters isone of dozens in a market-beating Rule Breakers portfolio that features five stocks that have at least doubled in price. Want to find out who they are? Try out 30 days of free access to the service.

Fool contributor Tim Beyers didn't own shares in any of the companies mentioned in this story at the time of publication. You can find out which other stocks he owns by checking Tim's Fool profile. The Motley Fool's disclosure policy always adds up.


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