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In creating this stock list we searched for companies with troubling accounting signs. While there are many ways to go about this, we started by looking for names with falling current ratios.

The higher the current ratio, the more capable the company is of covering its liabilities. Naturally, a falling current ratio is troubling. We screened for stocks with current ratios that have consistently dropped over three 12-month intervals and fallen below a ratio of 3.

We continued by focusing on 2 additional statistics from the balance sheet, namely the growth in receivables, and inventories.

Although receivables are considered to be an asset, they represent the portion of revenue not yet collected so it becomes a risk when receivables grow and revenues decline. We looked through the balance sheets to find those with negative trends in revenue relative to accounts receivable, with slower growth in revenue year-over-year than growth in accounts receivable, as well as receivables comprising a larger portion of current assets.

We then moved to looking at growth in quarterly revenue slower than growth in quarterly inventory year-over-year. We also looked for companies with quarterly inventory increasing as a percent of current assets.

When revenue is growing slower than inventory, it may indicate that the company is having trouble selling its inventory - although this might just indicate inventory building or a change in sales policies.

We were left with 9 companies on our list.

The List

Interactive Chart: Press Play to compare changes in 1-year return over the last two years for stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.

The stocks listed below are signaling three bearish trends, but do you think these names will drop? Us the list below as a starting point for your own analysis.

1. Advantest Corp. (NYSE:ATE): Manufactures and sells semiconductor and component test system products, and mechatronics-related products.

  • Market cap at $2.88B, most recent closing price at $14.43.
  • Revenue grew by -19.77% during the most recent quarter ($24,628M vs. $30,695M y/y). Accounts receivable grew by 31.83% during the same time period ($23,226M vs. $17,618M y/y). Receivables, as a percentage of current assets, increased from 14.16% to 21.15% during the most recent quarter (comparing 3 months ending 2012-12-31 to 3 months ending 2011-12-31).
  • Inventory grew by 3.93% during the same time period ($34,629M vs. $33,320M y/y). Inventory, as a percentage of current assets, increased from 26.79% to 31.53% during the most recent quarter (comparing 3 months ending 2012-12-31 to 3 months ending 2011-12-31).
  • Current Ratios decreased from 7.3 to 6.56 during the first time interval (12 months ending 2010-03-31 vs. 12 months ending 2009-03-31). For the second time interval, Current Ratios decreased from 6.56 to 5.6 (12 months ending 2011-03-31 vs. 12 months ending 2010-03-31). And for the final time interval, Current Ratios decreased from 5.6 to 1.97 (12 months ending 2012-03-31 vs. 12 months ending 2011-03-31).

2. Cambrex Corporation. (NYSE:CBM): Provides products and services for the development and commercialization of new and generic therapeutics.

  • Market cap at $376.15M, most recent closing price at $12.53.
  • Revenue grew by 3.55% during the most recent quarter ($69.93M vs. $67.53M y/y). Accounts receivable grew by 18.02% during the same time period ($43.09M vs. $36.51M y/y). Receivables, as a percentage of current assets, increased from 26.73% to 29.93% during the most recent quarter (comparing 3 months ending 2012-12-31 to 3 months ending 2011-12-31).
  • Inventory grew by 14.7% during the same time period ($71.22M vs. $62.09M y/y). Inventory, as a percentage of current assets, increased from 45.45% to 49.47% during the most recent quarter (comparing 3 months ending 2012-12-31 to 3 months ending 2011-12-31).
  • Current Ratios decreased from 2.71 to 2.55 during the first time interval (12 months ending 2010-12-31 vs. 12 months ending 2009-12-31). For the second time interval, Current Ratios decreased from 2.55 to 2.31 (12 months ending 2011-12-31 vs. 12 months ending 2010-12-31). And for the final time interval, Current Ratios decreased from 2.31 to 1.73 (12 months ending 2012-12-31 vs. 12 months ending 2011-12-31).

3. Gerdau S.A. (NYSE:GGB): Engages in the production and sale of steel products in Brazil and internationally.

  • Market cap at $12.79B, most recent closing price at $7.44.
  • Revenue grew by -0.86% during the most recent quarter ($8,987.7M vs. $9,065.8M y/y). Accounts receivable grew by 4.83% during the same time period ($4,632.13M vs. $4,418.73M y/y). Receivables, as a percentage of current assets, increased from 25.51% to 28.23% during the most recent quarter (comparing 3 months ending 2012-12-31 to 3 months ending 2011-12-31).
  • Inventory grew by 11.94% during the same time period ($9,021.54M vs. $8,059.43M y/y). Inventory, as a percentage of current assets, increased from 46.53% to 54.97% during the most recent quarter (comparing 3 months ending 2012-12-31 to 3 months ending 2011-12-31).
  • Current Ratios decreased from 2.94 to 2.58 during the first time interval (12 months ending 2010-12-31 vs. 12 months ending 2009-12-31). For the second time interval, Current Ratios decreased from 2.58 to 2.56 (12 months ending 2011-12-31 vs. 12 months ending 2010-12-31). And for the final time interval, Current Ratios decreased from 2.56 to 2.1 (12 months ending 2012-12-31 vs. 12 months ending 2011-12-31).

4. Randgold Resources Limited (NASDAQ:GOLD): Engages in the exploration and mining of gold mines in west and central Africa.

  • Market cap at $7.64B, most recent closing price at $82.94.
  • Revenue grew by 22.52% during the most recent quarter ($381.6M vs. $311.47M y/y). Accounts receivable grew by 117.8% during the same time period ($285.29M vs. $130.99M y/y). Receivables, as a percentage of current assets, increased from 15.5% to 29.46% during the most recent quarter (comparing 3 months ending 2012-12-31 to 3 months ending 2011-12-31).
  • Inventory grew by 33.5% during the same time period ($292.3M vs. $218.95M y/y). Inventory, as a percentage of current assets, increased from 25.91% to 30.19% during the most recent quarter (comparing 3 months ending 2012-12-31 to 3 months ending 2011-12-31).
  • Current Ratios decreased from 7.48 to 6.53 during the first time interval (12 months ending 2010-12-31 vs. 12 months ending 2009-12-31). For the second time interval, Current Ratios decreased from 6.53 to 4.75 (12 months ending 2011-12-31 vs. 12 months ending 2010-12-31). And for the final time interval, Current Ratios decreased from 4.75 to 4.1 (12 months ending 2012-12-31 vs. 12 months ending 2011-12-31).

5. Harbinger Group Inc. (NYSE:HRG): Operates as the holding company that focuses on acquiring interests in companies that operate in diverse range of industries.

  • Market cap at $1.2B, most recent closing price at $8.36.
  • Revenue grew by 4.83% during the most recent quarter ($1,222.3M vs. $1,166M y/y). Accounts receivable grew by 38.97% during the same time period ($566.7M vs. $407.79M y/y). Receivables, as a percentage of current assets, increased from 25.04% to 39.71% during the most recent quarter (comparing 3 months ending 2012-12-31 to 3 months ending 2012-01-01).
  • Inventory grew by 40.83% during the same time period ($679.2M vs. $482.29M y/y). Inventory, as a percentage of current assets, increased from 29.61% to 47.59% during the most recent quarter (comparing 3 months ending 2012-12-31 to 3 months ending 2012-01-01).
  • Current Ratios decreased from 58.47 to 11.03 during the first time interval (12 months ending 2010-12-31 vs. 12 months ending 2009-12-31). For the second time interval, Current Ratios decreased from 11.03 to 2.48 (12 months ending 2011-09-30 vs. 12 months ending 2010-12-31). And for the final time interval, Current Ratios decreased from 2.48 to 2.27 (12 months ending 2012-09-30 vs. 12 months ending 2011-09-30).

6. Infinera Corporation (NASDAQ:INFN): Provides optical networking systems based on photonic integration technology in the United States.

  • Market cap at $752.34M, most recent closing price at $6.52.
  • Revenue grew by 14.33% during the most recent quarter ($128.06M vs. $112.01M y/y). Accounts receivable grew by 34.15% during the same time period ($109.95M vs. $81.96M y/y). Receivables, as a percentage of current assets, increased from 21.39% to 25.6% during the most recent quarter (comparing 3 months ending 2012-12-29 to 3 months ending 2011-12-31).
  • Inventory grew by 43.61% during the same time period ($127.81M vs. $89M y/y). Inventory, as a percentage of current assets, increased from 23.22% to 29.76% during the most recent quarter (comparing 3 months ending 2012-12-29 to 3 months ending 2011-12-31).
  • Current Ratios decreased from 4.03 to 3.84 during the first time interval (12 months ending 2010-12-25 vs. 12 months ending 2009-12-26). For the second time interval, Current Ratios decreased from 3.84 to 3.21 (12 months ending 2011-12-31 vs. 12 months ending 2010-12-25). And for the final time interval, Current Ratios decreased from 3.21 to 2.98 (12 months ending 2012-12-29 vs. 12 months ending 2011-12-31).

7. Lattice Semiconductor Corporation (NASDAQ:LSCC): Designs, develops, manufactures, and markets programmable logic products and related software.

  • Market cap at $601.6M, most recent closing price at $5.21.
  • Revenue grew by -6.11% during the most recent quarter ($65.88M vs. $70.17M y/y). Accounts receivable grew by 26.93% during the same time period ($46.95M vs. $36.99M y/y). Receivables, as a percentage of current assets, increased from 12.3% to 16.34% during the most recent quarter (comparing 13 weeks ending 2012-12-29 to 13 weeks ending 2011-12-31).
  • Inventory grew by 18.54% during the same time period ($44.19M vs. $37.28M y/y). Inventory, as a percentage of current assets, increased from 12.4% to 15.38% during the most recent quarter (comparing 13 weeks ending 2012-12-29 to 13 weeks ending 2011-12-31).
  • Current Ratios decreased from 6.41 to 5.99 during the first time interval (52 weeks ending 2011-01-01 vs. 52 weeks ending 2010-01-02). For the second time interval, Current Ratios decreased from 5.99 to 5.78 (52 weeks ending 2011-12-31 vs. 52 weeks ending 2011-01-01). And for the final time interval, Current Ratios decreased from 5.78 to 5.41 (52 weeks ending 2012-12-29 vs. 52 weeks ending 2011-12-31).

8. National Instruments Corporation (NASDAQ:NATI): Manufactures and supplies measurement and automation products.

  • Market cap at $3.92B, most recent closing price at $31.79.
  • Revenue grew by 8.01% during the most recent quarter ($300.33M vs. $278.05M y/y). Accounts receivable grew by 19.1% during the same time period ($187.06M vs. $157.06M y/y). Receivables, as a percentage of current assets, increased from 21.83% to 24.37% during the most recent quarter (comparing 3 months ending 2012-12-31 to 3 months ending 2011-12-31).
  • Inventory grew by 28.78% during the same time period ($169.99M vs. $132M y/y). Inventory, as a percentage of current assets, increased from 18.34% to 22.14% during the most recent quarter (comparing 3 months ending 2012-12-31 to 3 months ending 2011-12-31).
  • Current Ratios decreased from 4.49 to 3.91 during the first time interval (12 months ending 2010-12-31 vs. 12 months ending 2009-12-31). For the second time interval, Current Ratios decreased from 3.91 to 3.38 (12 months ending 2011-12-31 vs. 12 months ending 2010-12-31). And for the final time interval, Current Ratios decreased from 3.38 to 3.13 (12 months ending 2012-12-31 vs. 12 months ending 2011-12-31).

9. Nucor Corporation (NYSE:NUE): Engages in the manufacture and sale of steel and steel products in North America and internationally.

  • Market cap at $13.87B, most recent closing price at $43.65.
  • Revenue grew by -7.84% during the most recent quarter ($4,451.27M vs. $4,829.68M y/y). Accounts receivable grew by -0.2% during the same time period ($1,707.32M vs. $1,710.77M y/y). Receivables, as a percentage of current assets, increased from 25.5% to 30.16% during the most recent quarter (comparing 3 months ending 2012-12-31 to 3 months ending 2011-12-31).
  • Inventory grew by 16.93% during the same time period ($2,323.64M vs. $1,987.26M y/y). Inventory, as a percentage of current assets, increased from 29.62% to 41.04% during the most recent quarter (comparing 3 months ending 2012-12-31 to 3 months ending 2011-12-31).
  • Current Ratios decreased from 4.22 to 3.9 during the first time interval (12 months ending 2010-12-31 vs. 12 months ending 2009-12-31). For the second time interval, Current Ratios decreased from 3.9 to 2.8 (12 months ending 2011-12-31 vs. 12 months ending 2010-12-31). And for the final time interval, Current Ratios decreased from 2.8 to 2.79 (12 months ending 2012-12-31 vs. 12 months ending 2011-12-31).

*Accounting data sourced from Yahoo Finance! All other data sourced from Finviz.

Source: 9 Stocks With Troubling Top-Line Growth And Weakening Liquidity