Do you want to know how security card printer Fargo Electronics (NASDAQ:FRGO) did this quarter? Do you have valid ID?

Just kidding. Regardless of the status of your credentials, you'll have to wait in line with the rest of us. Fargo reports its Q4 and full-year 2005 numbers tomorrow before market open.

Wall Street Wisdom:

  • General consensus. Only four analysts brave the Minnesota winter to follow this company. Three of them say you should buy it, and one says just hold on and shiver.
  • Revenues. Analysts expect Fargo's quarterly revenue report to exceed the year-ago number by nearly 12%. The target is $22 million.
  • Earnings. Profits are expected to do a good sight better than that. Wall Street is looking for 24% year-over-year improvement to $0.21 per share. For the record, that's at the very top of the range that Fargo cited in its earnings outlook back in October.

Margin watch:
It's steady as she goes at Fargo, as far as margin trends go (have I said "go" enough yet?) Gross, operating, and net margins are all on a slow but steady rise after their September 2004 slump.

Margins %

6/04

9/04

12/04

3/05

6/05

9/05

Gross

40.5

40.2

40.2

40.4

42.1

42.7

Op.

15.5

14.5

15.0

15.6

16.3

17.2

Net

11.0

10.4

10.7

11.2

11.8

12.3
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

Foolish forensics:
At first glance, you might not think an increase in Fargo's margins from 11% to 12.3% is that big of a deal. What's 1.3 percentage points in the broader scheme of things, anyway? Well, it's all relative. Moving from 11% to 12.3% makes Fargo's business 12% more profitable now than it was 18 months ago. Marry that boost in profitability with the perfectly respectable 12% sales growth that analysts are predicting, and you've got yourself a healthy boost in overall firmwide profits.

It also doesn't hurt that Fargo keeps its stock dilution pretty well under control. Shares outstanding have only increased 2.4% over the past year.

Competitors:
Fargo has only one real, publicly traded competitor -- the same company that tried to buy Fargo back in 2002: Zebra Technologies (NASDAQ:ZBRA).

Fool contributor Rich Smith does not own shares of either company named above.