Franklin Covey Co. (NYSE:FC)

CAPS Rating: 3 out of 5

The Company provides integrated consulting, training, and performance enhancement solutions to organizations and individuals in strategy execution, productivity, leadership, sales force effectiveness, effective communications, and other areas.


Player Avatar Dobbes (< 20) Submitted: 1/8/2010 2:53:34 PM : Underperform Start Price: $6.26 FC Score: -130.84

Franklin Covey has always been a laggard it seems.

Equity holders are being elbowed out as 2009 was the second year in a row that total liabilities were higher than total equity. Additional debt financing will be costly under this capital structure and it will be difficult for the firm to find the financing required to grow.

Growth however, is the last thing the stock seems to plan on doing. Net income has been negative in the past 7 of 10 years with negative operating income in 5 of the past 10 years. Revenue streams are steadily eroding as the Covey brand continues to lose steam from its blockbuster business books of yesteryear. By almost any measure the firm is shrinking like winter caps in the dryer.

Whats more is the falloff has begun to accelerate in the past 3 years. Revenues have committed hari kari since 2007.
With their most recent fiscal year end, accounts payable is higher than cash and cash equivalents for the second time in the past 3 years. Given that there is a very real chance at posting a negative operating income even in good economic conditions, the fact that there is not enough cash on hand to pay suppliers can be a very real and imminent cause of financial stress for the company. I just don't see the story ending well...

Member Avatar Dobbes (< 20) Submitted: 1/11/2010 12:08:34 PM
Recs: 0

Pretty graph:

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