Last week we looked at Enron (NYSE: ENE) and its businesses of energy and broadband. This week, I want to take a quick look at the finances for this company and see how it turns out.

Back in an earlier column on Pathfinder companies, I outlined my work on back-testing to see what criteria might indicate higher returns. I found the companies that I back-tested performed better on average if their previous five-year revenue growth rate was greater than 27%. Enron's is 31.38%, which is very good. However, a number of other items appear that require us to look closely at this company. First, it has very low margins: a gross margin of 14.73% and a net margin of 2.55%. Its return on investment (ROI) is 1.19%. Finally, the long-term debt-equity ratio is 0.92. That means Enron has slightly more equity than debt.

Now, as I've said before, high debt isn't always such a bad thing in a growing company. However, it's a good idea to look at the competition to see how the company stacks up. The closest competitor I can find is Williams Companies (NYSE: WMB), which carries a long-term debt-equity ratio of 1.84, but its return on investment is only 0.17%. Its five-year growth rate for sales is 11.18%.

Reading through Enron's most recent 10-Q, there are some interesting tidbits of information. The greatest amount of revenue that this company brings in is from its Wholesale Energy Operations and Services segment. Out of total revenue of $11,835 million, $11,062 million comes out of this segment. This is the part of the company that provides energy commodity trading to its customers, which allows them to hedge their future costs. Remember, Enron plans to provide the same services for customers that wish to purchase broadband.

I don't want to stop the analysis of this company here. The high debt is something that would turn me off normally. HOWEVER, reading through the 10-Q and other information on the company's website (, I sense a Rule Breaker. I seem to recall a plan to look at this company for that portfolio. OK, so I'm not the first. With its planned introduction of broadband trading, it's a First Mover. It already has experience in trading energy, which gives it a leg up (Top Dog?). We really need to look at this some more. Just imagine being able to buy a Rule Breaker/Drip/Pathfinder all in one company.

Let's not jump to conclusions so fast, though. I feel we need to take a look at Enron's competition, and also work harder to see if we have a Rule Breaker on our hands. Next week is President's Day, so I won't be writing for that day. The week after that I am returning from my annual training with the Air Force Reserves from here in Korea, so I doubt I'll be able to put a whole lot of meaningful research into this company while on the other side of the world. So, we'll continue looking at this company in my column on March 6. Meanwhile, check out Fool George Smythe's site. George hangs out in the Drip boards, has begun to write this column on Tuesdays, and he's done a lot of good research on the energy side of Enron's business.

On a personal note, I spent the week preparing to leave, and one of the things I had to do was see the accountant. He's an avid fan of The Motley Fool Radio show (no wonder I liked this guy), and he mentioned to me the Foolishness of a SEP-IRA for my consulting business. Hmmm. I never knew about it, and it will allow me to save a LOT of money and sock away more for retirement. Well, I would have known about the SEP-IRA if I had spent more time in the area run by our own Foolish Accountant, Roy Lewis (TMF Taxes). I suggest you take a trip over to our Foolish Taxes area and see what tax-saving ideas you can find, especially as April approaches.

Finally, I swore my son into the Georgia Army National Guard on Friday. I was nervous about his entering, but thanks to some help from the Fools on the Military Fools board, I got the straight info on the Army Guard. Thanks guys! If you are in the military, or want some good information on military life, come on over and see us.