MSNBC tells us Seth Jason at The Motley Fool says he judges company performance by comparing inventory increases to revenue increases: if inventory expands faster than sales, it could indicate a problem, one which he suggests may be happening at Cavco Industries. Trailing 12-month revenue rose 157.9% while inventory increased 288.2%. When comparing the most recent quarter to the same quarter last year, revenue grew 156.3% and inventory rose 288.2%. But the sequential quarterly period saw revenue fall 13.1% and inventory drop only 0.1%. In addition, Jason notes the type of inventory—raw materials, work-in-progress, and finished goods—may be telling. A large increase in finished goods inventory may mean product is not selling well. MHProNews has learned at Cavco, on a trailing 12-month basis, finished goods inventory grew the fastest, increasing 1,023.6%. On a sequential-quarter basis, work-in-progress inventory grew the fastest, increasing 19.1%. The author does caution that numbers cannot tell the whole story: Call the company’s investor relations for a more thorough accounting. Cavco is one of the largest manufacturers of manufactured and modular housing in the U.S. Cavco’s stock gained 4.23% in today’s trading.
(Image credit: Cavco Industries, Inc.)