Itron, Inc. (NASDAQ:ITRI)

CAPS Rating: 4 out of 5

The Company provides solid-state meters, automated meter reading technology, enterprise-wide software platforms, and real-time analytic applications for energy and water providers worldwide.

Recs

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Player Avatar menachem18 (61.32) Submitted: 6/21/2010 6:42:30 PM : Underperform Start Price: $66.03 ITRI Score: +113.16

I had picked this stock awhile back to out perform but so far it has failed to outperform the market. I took another look at the numbers and realized there was not much in their financial stats to make me want to keep them. They have seen a jump in quarterly earnings over 20% which always makes for a good starting point when searching for new stocks but the good news stops there. Looking at their ROA and ROE both of these numbers are below 5%. Generally I like to see companies with ROA and ROE at 10% or more. (Unless they are financial companies.) More bad news their profit margin is tiny. Some companies in other industries like FedEx and UPS can thrive off of 3% or 6% profit margins. Itron however has a serious cash flow problem on its hands that is constraining it. The Current Ratio is a very healthy 1.5. That however is misleading since Current Assets includes net Receivables. When you look at their cash on hand and their net receivables you realize that a lot of people owe them money and the company is probably living paycheck to paycheck as it were. Management has seen this problem and taken out an additional $125M credit line to help with liquidity. Itron may have a good business but I don't see it out performing any time soon. At least not until they figure out had to get paid quicker or manage their cash flow better.

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