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Accounts receivable is an important component of the revenue a company reports every year, but it is also a signal for potential problems. Accounts receivable indicates money earned but not yet collected. It is counted as part of revenue, but it is not cash received, and there is no guarantee that it will all be collected in the future.

When a company sees increases in accounts receivable over time greater than changes in revenue, it indicates that the quality of sales is deteriorating.

We ran a screen on highly shorted stocks, with float shorts above 10%, for those that have seen negative accounts receivable trends year-over-year: increases in current assets larger than changes in revenue, and increases in accounts receivable as a percent of current assets.

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.‬




We also created a price-weighted index of the stocks mentioned below, and monitored the performance of the list relative to the S&P 500 index over the last month. To access a complete analysis of this list's recent performance, click here.



List sorted by float short.

1. First Solar, Inc. (FSLR): Manufactures and sells solar modules using a thin-film semiconductor technology. Market cap of $7.48B. Float short at 28.76%. MRQ revenue has fallen 9.37% ($532.77M vs. $587.85M y/y) while MRQ accounts receivable has increased 67.45% ($605.65M vs. $361.68M y/y). Accounts receivable/current assets has increased from 22.38% to 32.98%, comparing 3 months ending 2011-06-30 to 3 months ending 2010-06-26. It's been a rough couple of days for the stock, losing 13.31% over the last week.

2. RPC Inc. (RES): Provides a range of oilfield services and equipment to the oil and gas companies primarily in the United States. Market cap of $3.62B. Float short at 17.51%. MRQ revenue has grown 75.18% ($443.03M vs. $252.9M y/y) while MRQ accounts receivable has increased 83.24% ($400.95M vs. $218.81M y/y). Accounts receivable/current assets has increased from 75.40% to 78.60%, comparing 3 months ending 2011-06-30 to 3 months ending 2010-06-30. It's been a rough couple of days for the stock, losing 5.64% over the last week. The stock has had a good month, gaining 13.62%.

3. R.R. Donnelley & Sons Company (RRD): Provides pre-media, printing, logistics, and business process outsourcing products and services to private and public sectors worldwide. Market cap of $2.67B. Float short at 13.44%. MRQ revenue has grown 8.92% ($2,623.4M vs. $2,408.6M y/y) while MRQ accounts receivable has increased 20.70% ($2,079M vs. $1,722.5M y/y). Accounts receivable/current assets has increased from 55.82% to 65.63%, comparing 3 months ending 2011-06-30 to 3 months ending 2010-06-30. This is a risky stock that is significantly more volatile than the overall market (beta = 2.01). It's been a rough couple of days for the stock, losing 6.62% over the last week.

4. Ritchie Bros. Auctioneers Incorporated (RBA): Ritchie Bros. Auctioneers Incorporated, an industrial auctioneer, sells various equipment to on-site and online bidders worldwide. Market cap of $2.30B. Float short at 13.37%. MRQ revenue has grown 10.86% ($114.52M vs. $103.3M y/y) while MRQ accounts receivable has increased 69.86% ($157.27M vs. $92.59M y/y). Accounts receivable/current assets has increased from 33.38% to 36.52%, comparing 3 months ending 2011-06-30 to 3 months ending 2010-06-30. It's been a rough couple of days for the stock, losing 5.79% over the last week.

5. Express Scripts Inc. (ESRX): Provides a range of pharmacy benefit management (PBM) services in North America. Market cap of $22.40B. Float short at 12.50%. MRQ revenue has grown 0.64% ($11,361.4M vs. $11,288.8M y/y) while MRQ accounts receivable has increased 15.08% ($1,939.4M vs. $1,685.3M y/y). Accounts receivable/current assets has increased from 44.26% to 71.92%, comparing 3 months ending 2011-06-30 to 3 months ending 2010-06-30. The stock has gained 2.11% over the last year.

6. Bill Barrett Corp. (BBG): Engages in the exploration, development, and production of natural gas and crude oil principally in the Rocky Mountain region of the United States. Market cap of $2.23B. Float short at 11.84%. MRQ revenue has decreased 1.11% ($194.44M vs. $196.62M y/y) while MRQ accounts receivable has increased 51.20% ($94.71M vs. $62.64M y/y). Accounts receivable/current assets has increased from 29.62% to 55.11%, comparing 3 months ending 2011-06-30 to 3 months ending 2010-06-30. The stock has gained 34.1% over the last year.

7. Complete Production Services, Inc. (CPX): Provides specialized completion and production services and products to develop hydrocarbon reserves for oil and gas companies primarily in North America and southeast Asia. Market cap of $2.19B. Float short at 11.79%. MRQ revenue has grown 53.22% ($551.97M vs. $360.25M y/y) while MRQ accounts receivable has increased 58.73% ($417.57M vs. $263.07M y/y). Accounts receivable/current assets has increased from 56.28% to 63.02%, comparing 3 months ending 2011-06-30 to 3 months ending 2010-06-30. This is a risky stock that is significantly more volatile than the overall market (beta = 2.66). The stock has gained 41.47% over the last year.

8. The Scotts Miracle-Gro Co. (SMG): Engages In The Manufacture Of Lawn And Garden Care Products. Market cap of $3.10B. Float short at 11.26%. MRQ revenue has decreased 9.71% ($1,058.7M vs. $1,172.6M y/y) while MRQ accounts receivable has increased 10.76% ($693.9M vs. $626.5M y/y). Accounts receivable/current assets has increased from 42.41% to 48.26%, comparing 3 months ending 2011-07-02 to 3 months ending 2010-07-03. The stock has had a good month, gaining 12.27%.

9. The Washington Post Company (WPO): Operates as a diversified education and media company in the United States and internationally. Market cap of $2.59B. Float short at 10.49%. MRQ revenue has decreased 10.39% ($1,073M vs. $1,197.41M y/y) while MRQ accounts receivable has increased 10.52% ($414.35M vs. $374.9M y/y). Accounts receivable/current assets has increased from 24.28% to 34.38%, comparing 13 weeks ending 2011-07-03 to 13 weeks ending 2010-07-04. It's been a rough couple of days for the stock, losing 8.16% over the last week.

10. Safeway Inc. (SWY): Operates as a food and drug retailer in North America. Market cap of $6.54B. Float short at 10.02%. MRQ revenue has grown 7.11% ($10,196.4M vs. $9,519.5M y/y) while MRQ accounts receivable has increased 17.23% ($536.9M vs. $458M y/y). Accounts receivable/current assets has increased from 11.14% to 14.07%, comparing 12 weeks ending 2011-06-18 to 12 weeks ending 2010-06-19. The stock has lost 2.91% over the last year.

Accounting data sourced from Google Finance, all other data sourced from Finviz.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: 10 Highly Shorted Stocks With Negative Receivables Trends