Golf Galaxy In The Rough (GGXY)
Golf Galaxy, which operates golf specialty stores, went public in August of last year. Recently the stock hit a 52-week high of $26.10, but it is tough to see how it got there.
The company recently announced its results for the quarter ending May 27. Revenue rose to $85.5 million from $58.6 million last year, but net income only hit $2.6 million compared to $1.7 million in 2005. Investors have to wonder what happened to the improvement in margins. Comparable store sales where up a paltry 1%.
Golf Galaxy guided that Q2 would have revenue as low as $98 million net income as low as $6.8 million. The company also revised its guidance for the year down to $292 to $300 million from $300 to $310 million.
The company's cash position dropped sharply from the immediately previous quarter moving down from $11.1 million to $2.9 million. Accounts payable rose from $22.3 million in the February 06 quarter to $47.5 million in the Q just announced. Never a good sign. Inventories also rose sharply.
The number of diluted share ran up from 8 million in May 05 to 11.6 million in May 06, which is a lot of dilution for shareholders.
With a trailing twelve month PE of almost 27, the stock may still be expensive despite its recent drop.
Douglas A. McIntyre can be reached at douglasamcintye@gmail.com. He does not own securities in the companies he writes about.
The company recently announced its results for the quarter ending May 27. Revenue rose to $85.5 million from $58.6 million last year, but net income only hit $2.6 million compared to $1.7 million in 2005. Investors have to wonder what happened to the improvement in margins. Comparable store sales where up a paltry 1%.
Golf Galaxy guided that Q2 would have revenue as low as $98 million net income as low as $6.8 million. The company also revised its guidance for the year down to $292 to $300 million from $300 to $310 million.
The company's cash position dropped sharply from the immediately previous quarter moving down from $11.1 million to $2.9 million. Accounts payable rose from $22.3 million in the February 06 quarter to $47.5 million in the Q just announced. Never a good sign. Inventories also rose sharply.
The number of diluted share ran up from 8 million in May 05 to 11.6 million in May 06, which is a lot of dilution for shareholders.
With a trailing twelve month PE of almost 27, the stock may still be expensive despite its recent drop.
Douglas A. McIntyre can be reached at douglasamcintye@gmail.com. He does not own securities in the companies he writes about.
posted by douglas mcintyre at 11:36 AM
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