Fed up with being cooperative, Diamond Walnut Growers said "no more Mr. Nice Nut" last week. The California nut-growing agricultural co-op has decided to incorporate as a real live Delaware for-profit and immediately take itself public in an offering underwritten by Piper Jaffray (NYSE:PJC), Merrill Lynch (NYSE:MER), and Bank of Montreal's (NYSE:BMO) Harris Nesbitt.

In a filing with the Securities and Exchange Commission on Friday, Diamond confirmed that it intends to go public at between $14 and $16 per share. The company will first incorporate in Delaware, then float as many as 6.1 million shares to the public, and then distribute another 6.7 million shares among the former co-op's members, under the stock symbol "DMND."

When all's said and done, we should see Diamond come public at a market cap of $192 million, give or take. At first glance, that makes the new issue look pretty darned attractive. Consider: According to Hoovers.com, in 2004 Diamond racked up $360 million in sales (a 17% improvement over 2003) and $178 million in "net income" (up 15% over the previous year).

So Diamond's going to have a P/S of 1.9 and a P/E of 1.1? Hardly. When something looks too good to be true, it probably is. So let's take a look at Diamond's actual S-1 filing and see what's going on.

Aha! There it is. What Hoovers calls "net income," the S-1 makes clear is actually "net proceeds," a number that does not include the costs of the nuts sold. Further down the S-1, we see that if Diamond had been an ordinary company in 2004, its earnings before income taxes would have been just $9.9 million -- which is actually down 36% from 2003. Subtract 2004 income taxes, and the new company's 2004 pro forma earnings would have been just $6.4 million. So in the space of a few pages of tiny font, Hoovers' $178 million has declined to $6.4 million in pro forma profits. It's a significant difference, and one that raises Diamond's P/E to a much pricier -- but more accurate -- 30.

Finally, consider that Diamond has been cash flow-negative in two of the past three years, and cash flow-negative through the first six months of this year as well. Put it all together, and this is one nut Foolish investors probably shouldn't bother cracking open come IPO day.

Fool contributor Rich Smith owns no shares in any company mentioned in this article.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.