On Sept. 4, optical component maker Avanex
- Margins and revenue are both moving in the right direction, creating a significant improvement on the bottom line. Management likes to point out that Avanex broke even in the fourth quarter on a pro forma basis, and it hopes to do the same in GAAP terms soon.
- What isn't going the right way is share dilution. I understand the need to raise some cash to finance operations, but a 30% increase in the share count seems a little excessive, even for a smallish growth stock.
- Avanex is a middling three-star Motley Fool CAPS stock today, ahead of rivals Bookham
(NASDAQ:BKHM) and JDS Uniphase(NASDAQ:JDSU) , but the same as three-star performer Finisar(NASDAQ:FNSR) .
(Figures in millions, except per-share data)
Income Statement Highlights
|
FY 2007 |
FY 2006 |
Change |
|
|---|---|---|---|
|
Sales |
$212.8 |
$162.9 |
30.6% |
|
Net Profit |
($30.6) |
($54.7) |
44.0% |
|
EPS |
($0.14) |
($0.34) |
58.8% |
|
Diluted Shares |
213.0 |
163.2 |
30.5% |
Get back to basics with the income statement.
Margin Checkup
|
FY 2007 |
FY 2006 |
Change* |
|
|---|---|---|---|
|
Gross Margin |
18.0% |
5.2% |
12.8 |
|
Operating Margin |
(15.3%) |
(29.0%) |
13.7 |
|
Net Margin |
(14.4%) |
(33.6%) |
19.2 |
Margins are the earnings engine.
Balance Sheet Highlights
|
Assets |
FY 2007 |
FY 2006 |
Change |
|---|---|---|---|
|
Cash + ST Invest. |
$43.8 |
$67.7 |
(35.3%) |
|
Accounts Rec. |
$33.8 |
$26.8 |
26.1% |
|
Inventory |
$15.2 |
$18.4 |
(17.5%) |
|
Liabilities |
FY 2007 |
FY 2006 |
Change |
|---|---|---|---|
|
Accounts Payable |
$32.5 |
$38.3 |
(15.0%) |
|
Long-Term Debt |
$0.0 |
$4.6 |
N/A |
The balance sheet reflects the company's health.
Cash Flow Highlights
Free cash flow is a Fool's best friend. But Avanex wouldn't let our buddy come out and play today. Rats!
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