Schnitzner Steel Revisit
In Steel spiel - Schnitzner Steel I gave my reasons for not like it. It seems the analysts missed yet again.
Reporting also really gets to me. It grossly misleads investors. That story I linked to is a disgrace. It says:
"Earnings per share increased 23 percent to 85 cents. Revenue rose 18 percent to $604."
That is a rosy description of this company. That is true if you compare to the quarter a year earlier when earnings were $510 million. However, the quarter before earnings were $749 million, so revenue in fact DECLINED by 24%. Earnings were 47% higher the previous quarter, from $1.25 to $0.85, and the quarter before earnings were $1.47. Seriously earnings were 73% higher two quarters before.
Further, this huge decline has come despite their share buy back program. The earnings available to shares was actually 54% higher the quarter before and 77% higher two quarters earlier. The share buy back has actually hidden the degree of the implosion of earnings.
This stupid company, look even closer, they've increased long term debt by about $100 million and I doubt that the cost of that extra debt has worked into the financial statements yet, so expect an even bigger MARGIN squeeze.
If you take out the $18-19 million increase in goodwill and intangible assets, real shareholder equity for the company went down by $9 million.
Inventory is up 21%, planning for a booming economy are they?