- Analytical Commentary -

October 18, 2010 (FinancialWire) (http://www.financialwire.net/)  (Investrend Forums Syndicate) (By Gary Vassalotti, LIFA) (Entire post at http://www.investrendweblogs.net/vassalotti/2010/09/10/itnm-sales-trends/) — Continuing our look at International Monetary Systems (ITNM.OB), we now turn our attention to the company’s Consolidated Statement of Operations. The operations statement is where a company reports it sales and general expenses. I like to begin by looking at the last five years of revenues.

The sales numbers can be obtained from a variety sources, but I like to retrieve the numbers from the company's SEC filings or from its annual reports. Looking at the past five annual SEC filings (Form 10-K filings) for ITNM we obtain the following revenue figures:

$6,187,138 (2005), $8,782,666 (2006), $14,772,045 (2007), $14,023,550 (2008) and $13,968,152 (2009).

At first glance we see good earnings growth from 2005 to 2009. Looking closer, you will find that the growth is not linear year-to-year, but that ITNM has had some good year-to-year comparisons (such as 2007/2006), as well as some years when growth was slower or even negative (such as 2008/2007). Calculating different growth rates from these figures will tell us more about the company's operations and trends.

First we look at a five year average growth rate. This will give us some insight into how the company manages growth over differing economic situations. For ITNM, its five year average rate is 25.15% That is an outstanding rate of growth, and we will look at this number in comparisons to the company's net earnings and PE ratio later in the analysis.

Another growth rate calculation to look at is the yearly changes in revenues. The change from 2005 to 2006 is 41.95%, 2006 to 2007 is 68.2%, 2007 to 2008 is -3.85%, and 2008 to 2009 is -1.66%.

We can infer some results from those figures. For example, we know that on a longer-term basis the company is in a major growth period of its existence (which the five-year average growth rate implies), and that the company has been impacted during differing economic periods. However, the impact during these periods was smaller than other companies experienced — indicating that ITNM has some resistance to recessionary pressures. In fact, comparing to the numbers we derived from government statistics (in which growth in sales retail and business sectors was around 5% or lower) we see that ITNM has indeed grown its revenues during slow business periods.

High top-line growth is definitely a good thing. No one will argue with higher sales. But investors are more concerned about the bottom line — the earnings — the money that is theoretically available for the shareholders of the firm. So, let’s compare top-line growth rates with the rate of growth to the bottom line.

The earnings number I look at is the Net Income line in the operations statement. This is the earnings number before the per-share calculation. We can see that ITNM has had a series of losses, but that it is now starting to earn money. It is not possible to calculate a meaningful earnings rate growth number when earnings start out negative, but the trend is positive.

The EPS number (reported below the Net Income number) is also important, since it shows the per-share earnings. I like to look at the gross earnings first because the shares outstanding for most companies change year-to-year, as they are adjusted for splits, options being paid, and new stock issues. Those actions will affect the per-share numbers making year to year comparisons difficult.

Now that we have our earnings and revenue growth we will start to look at individual line items in the operations statement to see where costs have grown (and if they have grown larger in comparison to sales). Doing so will help us to determine whether or not certain costs may be getting out of control, as well as to estimate earnings as sales grow (since some expenses are directly tied to revenue).

(See Part Three at http://www.investrendweblogs.net/vassalotti/2010/09/10/analyzing-itnm-pt-3/)

(See Part Two at http://www.investrendweblogs.net/vassalotti/2010/08/18/analyzing-intl-monetary/)

(See Part One at http://www.investrendweblogs.net/vassalotti/2010/07/23/where-are-shoppers/)

=========

More about ITNM: Other FinancialWire(tm) news about International Monetary is accessible via The FinancialWire(tm) search function (at http://www.financialwire.net/?s=itnmtcb), additional information and independent research on International Monetary is available via Investrend Syndications (at http://www.investrend.com/synd0006), and official information and company filings from International Monetary are accessible via the SEC website (at http://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001097430).

=========

Gary Vassalotti, LIFA, is president of Vimcor, an equity analysis and portfolio management practice, as well as a contributing equity research analyst for Investrend Research. He previously worked with First American Bank, NA, First Union National Bank, and Montag Management, and has an overall interest in global markets. Mr. Vassalotti is a member of the North Carolina Society of Financial Analysts, the CFA Institute, and the North Carolina Investment Advisors Association (and was a former board member). Mr. Vassalotti has a B.S. in Finance with an emphasis in Economics from The Pennsylvania State University.

=========

Equity research on any public company is available through the Shareholders Research Alliance (go to http://www.investrend.com/synd0004 for more information).  Real-time, streaming research for companies and funds mentioned in FinancialWire(tm) news is available via the Investrend Research Syndicate (at http://investrend.stocksmart.com/ss/html/hpcompany.html).  Current valuation analysis research for companies and funds mentioned in FinancialWire(tm) news is available via the Investrend Research Syndicate (at http://www.valuengine.com/rep/searchsrep?pid=42&srchfor=).

FinancialWire(tm) is committed to serving the financial community through true journalism and providing relevant resources to investors. Standards-based, independent equity research on numerous public other companies is available through the Investrend Research Syndicate (http://www.investrend.com/reports) written by FIRST Research Consortium (http://www.investrend.com/FIRST) member-providers. Free annual reports and company filings for companies mentioned in the news are available through the Investrend Information Syndicate (at http://investrend.ar.wilink.com/?level=279). FinancialWire(tm), in cooperation with the Investrend Broadcast Syndicate, also provides complete, daily conference call and webcast schedules as a service to shareholders and investors via the FirstAlert(tm) Network’s “FirstAlert(tm) Daily” (at http://www.financialwire.net/news-alerts/).

FinancialWire(tm) is a fully independent, proprietary news wire service. FinancialWire(tm) is not a press release service, and receives no compensation from subject entities, companies, equities, or representatives thereof, for its news, opinions or distributions. Further disclosure is posted at the FinancialWire(tm) website (at http://www.financialwire.net/disclosures.php and http://www.financialwire.net/2010/04/23/safe-harbor/). Additional resources for investors are also accessible via the FinancialWire(tm) website (at http://www.financialwire.net/2010/04/23/investor-resources/). Contact FinancialWire(tm) directly via inquiries@financialwire.net.

Copyright © MMX, FinancialWire(tm); All rights reserved.

[ftrdnwswnd] [ssryrsyr] [nthrdrdrht] [pltfrm] [itnmtcb] [synd0006] [bsdarrgnmnt] [ntntlmntrysys] [bnkngnknb] [nvstmntbnkg] [fnccmms] [dscrtnryrn] [prfssnlsrvctsrc] [tchnlgy] [advnctchnlgy]

Legal Disclaimer:

EIN Presswire provides this news content "as is" without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the author above.