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

The following is a list of industrial goods companies that have seen accounts receivable grow faster than revenues during the most recent quarter--an accounting trend that might raise a flag for some investors.

To create this list, we started with a universe of about 140 industrial goods stocks. 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 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.

The list has been sorted by the difference between accounts receivable and revenue growth.

1. Ener1, Inc. (HEV): Industrial Electrical Equipment Industry. Market cap of $647.43M. Revenue grew by 112.56%, while accounts receivable grew by 217.36%. Accounts receivable, as a percentage of assets, increased from 16.87% to 20.00% (comparing 3 months ending 2010-09-30 vs. 3 months ending 2009-09-30). Short float at 4.83%, which implies a short ratio of 5.78 days. The stock has lost -3.63% over the last year.

2. Orbital Sciences Corporation Co (ORB): Aerospace/Defense Products & Services Industry. Market cap of $1.01B. Revenue grew by 13.51%, while accounts receivable grew by 42.81%. Accounts receivable, as a percentage of assets, increased from 31.08% to 42.84% (comparing 3 months ending 2010-09-30 vs. 3 months ending 2009-09-30). Short float at 3.96%, which implies a short ratio of 8.12 days. The stock has gained 5.34% over the last year.

3. Astec Industries, Inc. (ASTE): Farm & Construction Machinery Industry. Market cap of $701.45M. Revenue grew by 7.08%, while accounts receivable grew by 35.74%. Accounts receivable, as a percentage of assets, increased from 16.81% to 20.61% (comparing 3 months ending 2010-09-30 vs. 3 months ending 2009-09-30). Short float at 6.46%, which implies a short ratio of 9.46 days. The stock has gained 18.09% over the last year.

4. Calgon Carbon Corporation (CCC): Pollution & Treatment Controls Industry. Market cap of $811.01M. Revenue grew by 15.69%, while accounts receivable grew by 38.62%. Accounts receivable, as a percentage of assets, increased from 31.49% to 31.58% (comparing 3 months ending 2010-09-30 vs. 3 months ending 2009-09-30). Short float at 5.25%, which implies a short ratio of 6.11 days. The stock has gained 0.42% over the last year.

Source: 4 Industrial Goods Stocks Raising Receivable Flags