Palm (NASDAQ:PALM) has showed some stock strength lately with the shares rising 48% in six months. That's despite a weak first-quarter report and ever-tougher competition for those picky cell phone customers.

Is the company palming some magic coin, or is it all just a trick of the light? We'll see on Thursday night, when the company shows its second-quarter figures. Here's how the event is shaping up.

What Fools say:
Here's how Palm's CAPS rating stacks up against some of its peers and competitors.

 

Market Cap (billions)

Trailing P/E Ratio

CAPS Rating

Apple (NASDAQ:AAPL)

$123.0

27.2

 ***

Google (NASDAQ:GOOG)

$138.5

28.9

 ***

Nokia (NYSE:NOK)

$74.9

9.6

 ****

Research In Motion (NASDAQ:RIMM)

$55.9

36.6

 **

Palm

$0.815

N/A

 *

Data taken from Yahoo! Finance and Motley Fool CAPS on 09/16/2008.

As you can see above, Palm is a vulnerable minnow swimming among huge sharks with razor-sharp teeth. All-star CAPS player metaphorical thinks that the Palm Centro's relative success shocked even the company itself. However, Palm is "not as cool as iPhone, not as productive as Blackberry, not as prominent as [Microsoft (NASDAQ:MSFT) Windows Mobile]."

What management does:
Don't let the children see these tables -- it's scary stuff. Let me reach into fellow Fool Rich Duprey's financial arsenal for a moment, pulling out the Altman Z Score measure of financial stability. Last year, Palm held its own with fairly secure Z scores just above 3.0. Today, Capital IQ says that the measure has plummeted to a terrifying 0.58. Here there be tigers, Fool!

Margins

2/2007

5/2007

8/2007

11/2007

2/2008

5/2008

Gross

36.6%

36.9%

36.4%

35.1%

33.4%

30.1%

Operating

6.6%

4.7%

3.1%

(0.1%)

(3%)

(7.6%)

Net

4.4%

3.6%

2.5%

1.1%

(3.4%)

(8%)

FCF/Revenue

4.8%

9.2%

9%

7%

1%

(3.1%)

 Growth (YOY)

2/2007

5/2007

8/2007

11/2007

2/2008

5/2008

Revenue

3.4%

(1.1%)

(1.7%)

(1.2%)

(8.9%)

(15.5%)

Earnings

(79.1%)

(83.2%)

(88.3%)

(79.8%)

N/A

N/A

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:
It's very hard to see any positives in the Palm story. Its handsets have fallen behind the competition in important dimensions like bang for the buck, drool-worthy features, brand name recognition, and plain old coolness. If Mike sports a second-generation iPhone, Julia is waiting for the first Androids, and Morgan flashes the latest BlackBerry, I don't think you'll impress anyone with even a top-of-the-line Palm anymore.

And it shows in the company's financial performance. Yes, Palm is stealing some market share at the low end of the mobile market, but that's hardly the sweet spot for profitability. I expect more doom and gloom in this report, just like in the last two outings. And before long, it would not surprise me to see someone like HTC or Sony Ericsson picking up what's left of Palm's brand equity for pennies on the dollar. The recent share price strength looks like a freak accident to me.

More mayhem:

Microsoft is a Motley Fool Inside Value selection. Google is a Motley Fool Rule Breakers pick. Apple is a Motley Fool Stock Advisor recommendation. Try any of our Foolish newsletters today, free for 30 days.Or just sign up for a free CAPS account to find the identities of your fellow Fools who were quoted above. They might have more to tell you!

Fool contributor Anders Bylund is a Google shareholder but holds no other position in any of the companies discussed here. You can check out Anders' holdings if you like, and Foolish disclosure is the Punxsutawney Phil of financial forecasting.