Comments on: How to Master Analyzing the Income Statement

By: tawan

tawan — Tue, 17 Feb 2009 02:53:22 +0000

Thank you for elucidating some difficult financial concepts. I enjoyed reading your article…

By: Jae Jun

Jae Jun — Mon, 26 Jan 2009 04:34:06 +0000

Thanks Div Tree!

By: Dividend Tree

Dividend Tree — Sun, 25 Jan 2009 04:09:59 +0000

JJ: excellent educational experience. I like reading your posts that dice and chop financial statements.

Dividend Tree’s last blog post..DBN in my Dividend Growth Portfolio – An Update

By: Jae Jun

Jae Jun — Thu, 22 Jan 2009 07:31:08 +0000

@ Sir
When I look at CROX the business, it isn’t worth $5. I see a company that should go bankrupt from the way things are going. As for the drop from $70, all I can say is that price follows value.

Nevertheless, good luck in your position.

@ Valuegeek
One thing I learnt about short selling was that shorts have got to have 2x or 3x the conviction of longs and that shorts never go according to plan. There are too many foolish banks on wall street willing to give their money to failing companies.

By: sir

sir — Thu, 22 Jan 2009 06:37:08 +0000

Chris & valuegeek

there is no different between $1.4 stock price to $4 to $8 for crocs shares after the $70 share price.
i hope for a nice rebound after the next reports, so i will call you above $5 when institutionals will buy back crox shares

By: Bearish

Bearish — Thu, 22 Jan 2009 03:29:43 +0000

Nice analysis. I owned CROX for a brief time around $4, cause it just looked like a screaming bargain based on a crude scan of the numbers. But inventory and the other numbers you pointed out indicate potential trouble.

Bearish’s last blog post..Are banks worried about Obama’s pledge for transparency?

By: valuegeek

valuegeek — Wed, 21 Jan 2009 23:45:04 +0000

I shorted CROX back when it was trading in the $60s in 2007. Ironically, I ended up losing money because I covered in the $70s. This is a seriously troubled company. Management is basically a gang of crooks, issuing themselves and selling massive amounts of stock in 2007. The product is not protected by patents (despite claims to the contrary by the company) and easily duplicated by lower cost manufacturers in China, plus the whole rubber footwear craze has the feel of a passing fad. Asensio, a dedicated short-seller, has a report on the stock that is 2 years old, but is still an entertaining read.

valuegeek’s last blog post..Two year anniversary

By: Chris

Chris — Wed, 21 Jan 2009 22:38:20 +0000

Excuse me SIR,
Save your money and buy a lotto ticket. Better odds than betting on a fad

By: sir

sir — Wed, 21 Jan 2009 21:08:54 +0000

old news
i believe all bad news in,i will watch for a rebound during this year.
rsi will be strong above $5

By: Jae Jun

Jae Jun — Wed, 21 Jan 2009 17:20:00 +0000

I was quite shocked to see such bad numbers myself. It’s something to beware with one product companies. Their margins will become non-existant the minute the economy contracts or they make an error with the product.

Unless you are Tiffany or Chanel, companies shouldn’t even consider raising prices in todays environment.

Great point about the margins Brad.

By: Nurseb911

Nurseb911 — Wed, 21 Jan 2009 11:47:23 +0000

That Income Statement is BRUTAL!!! I’ve never looked at the company, but now I definitely don’t want to.

I think I’ve done a good job of outlining my perspective on “never compete on price” through my two stock analyses of Costco & Coca-Cola. Even though the perception by an investor is that their good/service is “cheap” they don’t sacrifice margins.

In this economic environment it is very difficult for companies to increase revenues and margins are their saving grace. When you compete on price your costs remain the same and revenues fall. Even if they increase over the short-term consumers aren’t very receptive to an increase in price later on. You’re basically just taking money out of your own pocket. McDonald’s learnt this the hard way about 7 years ago and Motorola most recently. Even if you have a sustainable competitive advantage in your margins (Coke vs. Pepsi) why would Coke ever undersell a Pepsi product and take away that additional profit from themselves?

Thanks for the link btw – you’ve had some really good articles lately. Keep up the good work!

Nurseb911’s last blog post..Mail Bag: Stryker (SYK)