Seeking Alpha
Value, growth, long-term horizon, medium-term horizon
Profile| Send Message|
( followers)  

The following is a list of large cap stocks that have seen accounts receivable grow faster than revenues during the most recent quarter--an accounting trend that deserves closer attention.

To create this list, we started with a universe of the largest 120 U.S. companies by market cap. We crunched the numbers on the most recent quarter's financials, and narrowed down the list to only focus on those companies that have seen accounts receivable grow faster than revenue during the most recent quarter.

Sometimes, problems with accounts receivable simply indicate a change in the business (like an acquisition), or a lazy collections department. However, extreme differences between accounts receivable and revenue can also suggest a desperate company that's trying to boost sales by giving its customers overly generous payment terms.

Does this mean the customers of the companies mentioned below cannot pay their bills? Or are they withholding payments? Given these fundamental trends, are these companies due for a correction?

Of course, there may be several explanations for these accounting trends. Please use this list as a starting point for your own analysis - check out the 10-Q and related management discussions to find out more.

Financial data sourced from Google Finance. Short float and performance data sourced from Finviz.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the top six stocks mentioned below. Analyst ratings sourced from Zacks Investment Research. Note: The numbers on top of items represent the forward P/E ratio, if available.

1. Cisco Systems, Inc. (NASDAQ:CSCO): Networking & Communication Devices Industry. Market cap of $114.9B. MRQ Revenue grew by 19.17% on a y/y basis, while accounts receivable grew by 41.53%. Accounts receivable, as a percentage of current assets, increased from 7.07% to 8.87% (comparing 13 weeks ending 2009-10-24 vs. 13 weeks ending 2010-10-30). Short float at 0.74%, which implies a short ratio of 0.57 days. The stock has lost -9.75% over the last year.

2. Walt Disney Co. (NYSE:DIS): Entertainment Industry. Market cap of $75.25B. MRQ Revenue grew by -1.27% on a y/y basis, while accounts receivable grew by 19.16%. Accounts receivable, as a percentage of current assets, increased from 40.83% to 47.31% (comparing 3 months ending 2009-10-03 vs. 3 months ending 2010-10-02). Short float at 2.16%, which implies a short ratio of 3.64 days. The stock has gained 33.99% over the last year.

3. Novartis AG (NYSE:NVS): Drug Manufacturer. Market cap of $129.18B. MRQ Revenue grew by 13.55% on a y/y basis, while accounts receivable grew by 32.93%. Accounts receivable, as a percentage of current assets, increased from 25.68% to 37.49% (comparing 3 months ending 2009-09-30 vs. 3 months ending 2010-09-30). Short float at 0.84%, which implies a short ratio of 4.05 days. The stock has gained 9.24% over the last year.

4. Occidental Petroleum Corporation (NYSE:OXY): Independent Oil & Gas Industry. Market cap of $79.61B. MRQ Revenue grew by 19.46% on a y/y basis, while accounts receivable grew by 33.25%. Accounts receivable, as a percentage of current assets, increased from 56.46% to 59.02% (comparing 3 months ending 2009-09-30 vs. 3 months ending 2010-09-30). Short float at 1.38%, which implies a short ratio of 2.74 days. The stock has gained 31.06% over the last year.

5. PetroChina Co. Ltd. (NYSE:PTR): Major Integrated Oil & Gas Industry. Market cap of $249.2B. MRQ Revenue grew by 35.69% on a y/y basis, while accounts receivable grew by 49.23%. Accounts receivable, as a percentage of current assets, increased from 7.61% to 12.69% (comparing 3 months ending 2009-09-30 vs. 3 months ending 2010-09-30). Short float at 0.21%, which implies a short ratio of 1.93 days. The stock has gained 23.53% over the last year.

6. Telefonica, S.A. (NYSE:TEF): Telecom Services. Market cap of $113.51B. MRQ Revenue grew by 7.31% on a y/y basis, while accounts receivable grew by 20.48%. Accounts receivable, as a percentage of current assets, increased from 50.14% to 63.55% (comparing 3 months ending 2009-09-30 vs. 3 months ending 2010-09-30). Short float at 0.13%, which implies a short ratio of 0.2 days. The stock has gained 7.06% over the last year.

7. Merck & Co. Inc. (NYSE:MRK): Drug Manufacturer. Market cap of $104.44B. MRQ Revenue grew by 83.89% on a y/y basis, while accounts receivable grew by 91.84%. Accounts receivable, as a percentage of current assets, increased from 12.82% to 26.29% (comparing 3 months ending 2009-09-30 vs. 3 months ending 2010-09-30). Short float at 0.69%, which implies a short ratio of 1.28 days. The stock has lost -8.99% over the last year.

8. The Home Depot, Inc. (NYSE:HD): Home Improvement Stores Industry. Market cap of $59.83B. MRQ Revenue grew by 1.45% on a y/y basis, while accounts receivable grew by 9.01%. Accounts receivable, as a percentage of current assets, increased from 7.47% to 8.59% (comparing 13 weeks ending 2009-11-01 vs. 13 weeks ending 2010-10-31). Short float at 1.53%, which implies a short ratio of 2.13 days. The stock has gained 35.83% over the last year.

9. Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE:TSM): Semiconductor Industry. Market cap of $68.76B. MRQ Revenue grew by 24.81% on a y/y basis, while accounts receivable grew by 32.05%. Accounts receivable, as a percentage of current assets, increased from 14.69% to 19.21% (comparing 3 months ending 2009-09-30 vs. 3 months ending 2010-09-30). Short float at 0.34%, which implies a short ratio of 1.44 days. The stock has gained 38.09% over the last year.

10. Canadian Natural Resources Limited (NYSE:CNQ): Independent Oil & Gas Industry. Market cap of $46.4B. MRQ Revenue grew by 17.23% on a y/y basis, while accounts receivable grew by 23.86%. Accounts receivable, as a percentage of current assets, increased from 54.79% to 66.99% (comparing 3 months ending 2009-09-30 vs. 3 months ending 2010-09-30). Short float at 0.38%, which implies a short ratio of 1.45 days. The stock has gained 30.28% over the last year.

Source: 10 Large Cap Stocks Raising Receivables Flags