Deckers Outdoor, my recommendation for Hidden Gems, has three product lines. Its original brand, Teva, cranked out a new assortment of sports sandals, thongs (the ones for your feet!), and closed-toe shoes and grew sales 15% for the year. Even though stores like Nordstrom
Looking at the financial statements, accounts receivable jumped out at me. It increased 124% year over year versus the 77% increase in sales. If you are familiar with Howard Schilit's book Financial Shenanigans, you know this can be a warning sign that the company is aggressively booking sales. So here is the days sales outstanding (DSO defined as accounts receivable/sales x 365 days) trend over the past four years.
|DSO||81 days||78 days||56 days||72 days|
It looks like 2003 was a low point and good year for collections. We don't need to be alarmed, but this is worth keeping an eye on because we Fools like companies with conservative accounting.
In the release, CEO Doug Otto also raised the earnings forecast for 2005 to a range of $2.45-$2.55. That's only an 8% increase from the $2.32 generated in 2004. So maybe last year was too good.
What might that mean for the stock price today? Let's take the average of the P/E ratios for Nike