Value Line's (NYSE:VALU) "timeliness" ratings have guided value investors for years. Similarly storied names such as Reuters (NASDAQ:RTRSY) and soon Thomson (NYSE:TOC) come to it for guidance. And its earnings report on Friday will guide investors' expectations for the balance of the year. What should we expect to see?

What analysts say:
Nada. As far as I can tell, no matter how many of them read Value Line, the publication, not a single analyst follows Value Line, the stock. While that may sound strange, I've noticed a pattern among similar companies. Turns out, you can count the number of analysts who actively track Morningstar (NASDAQ:MORN) and TheStreet.com (NASDAQ:TSCM) on one hand, too.

What management says:
If brevity is truly the soul of wit, then Value Line has a real future in stand-up comedy. The company doesn't follow the usual practice of filing 8-K earnings releases with the SEC. In fact, it hardly issues earnings releases at all. The last one, back in September, included just two paragraphs of text, and a "Consolidated Summary of Financial Results" that amounted to all of six lines.

The punchline: Sales were down, and so were profits. Hmm. That wasn't very funny.

What management does:
Not a lot. Gross margin consistently sits north of 90%, operating margin hasn't seen the south side of 40% in two years, and the net margin rarely falls far short of 30%. The punchline here: Even as gross margin inched upward, management somehow found a way to erode its operating and net margins in each of the last two quarters.

Margins

4/06

7/06

10/06

1/07

4/07

7/07

Gross

91.7%

91.7%

91.7%

91.7%

91.7%

91.8%

Operating

41.3%

41.9%

42.7%

43.9%

42.6%

41.8%

Net

27.5%

28.1%

28.8%

29.5%

29.4%

29.2%

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.

One Fool says:
Hey, that wasn't funny, either. What's with these jokers, anyway? Well, taking a look at the last couple of quarters' financials, I see that revenue declined year-over-year in each, but cost of goods sold (what little there were of them) declined in tandem. As a result, the firm's gross margin inched ever so slightly upward. But management fixed that right away, making sure that even as its sales base eroded, operating costs kept on growing. As a result, net profitability continued to decline.

I'm not impressed with what I see here. Among brand-name financial data services, both Morningstar and TheStreet.com have managed to keep their sales rising at double-digit rates. Yet with arguably the gold-standard name in this industry, Value Line is allowing its sales to erode, taking its profitability with it. I could tell you I'm optimistic that we'll see a dramatic reversal of this trend tomorrow -- but I'd be joking.

Yet for all this, Value Line got tapped to join the Motley Fool Stock Advisor portfolio by growth stock guru David Gardner back in August. What gives? Pick up your free copy of the newsletter, and learn why David sees growth where no one else is looking in Value Line.