Kitchen and bath king American Standard Companies (NYSE:ASD) turned in yet another strong quarter on Monday -- at least on the surface. So why, its investors probably want to know, did the company's share price fall yesterday?

To learn the answer(s), grab a pipe snake, and we'll go fishing for them in American Standard's earnings release. What you'll find at the end of the journey will be two answers: one silly and typically Wall Street-ish, the other cause for concern even among Fools. First off, revenues for the quarter rose an underwhelming 7%. But that's not likely the problem. Earnings growth more than made up for the slow pace set by revenue, rising 27% over last year's third quarter. The company actually beat analyst estimates and came in at a whopping $0.71 per diluted share.

More likely, it was American Standard's cautious earnings guidance that chilled the market's enthusiasm for the stock. In quick succession, here are the numbers: American Standard predicted per-share earnings of $0.42 for next quarter -- but Wall Street wanted to hear "$0.46." So close to the end of the year, the company was able to narrow its profits prediction for the full year as well, to about $2.23 per share. The Street's desire? $2.24. Put those two numbers together, and I'd wager good money that's why American Standard's stock got clobbered with a 4.5% loss for the day.

It's silly, really. Analyst hopes aside, the company is still predicting 22% earnings growth over full-year 2003. And with a forward P/E ratio of 16, that gives American Standard a very tempting PEG of 0.73. That's cheap, and likely one of the reasons that master investor Warren Buffett owns the stock. But on the other hand, there are a couple of real reasons to look askance at American Standard's earnings release. They just aren't the same ones the Street thinks are important.

Let's look at two metrics for measuring a manufacturer's financial health. The first is days sales outstanding, which depicts how much time elapses between when a company sells its goods and when it gets paid. In American Standard's case, this number rose from 42.8 to 47.5 -- so the company is not collecting payment as quickly as it was able to one year ago.

The news was similar with regard to inventory turns, or the number of times the company can sell everything in its warehouses down to bare shelving, then restock and do it all over again (hypothetically, of course) within a given period. In the first nine months of 2004, that number declined from last year's 6.3 times to 5.9. So American Standard is not selling as efficiently this year as last.

Do those slowing indicators justify the company's 4.5% haircut? I doubt it. But they're numbers to keep an eye on in future quarters. If the company doesn't fix the problems that caused them, they could develop into a trend -- and prove Wall Street's overreaction of today right for all the wrong reasons.

Fool contributor Rich Smith owns no shares in American Standard.